Main Menu
Newsletter

Adapting To The New FLSA Salary Threshold

1.31.20

The new year has brought many things, including an increased threshold for many employees classified as exempt. The federal Fair Labor Standards Act (FLSA) provides for limited exemptions from its timekeeping, minimum wage, and overtime requirements, including the popular salaried, white-collar employee exemptions. For employees that already met (or received increases to meet) the new salary-exempt requirements of $684/week, it might otherwise be the status quo for 2020. 

For employees that were converted to non-exempt, however, many employers will find themselves continuing to evaluate the situation over the coming months. If you might tweak things in the future (or have not converted all affected employees still), here are some FLSA principles to consider as you proceed.

Alternatives Particular To The Healthcare Industry

From the start, many in the healthcare industry have the option of a 14-day work “period” with an 80-hour overtime threshold instead of the standard seven-day workweek’s 40-hour threshold. This statutory alternative at 29 U.S.C. § 207(j) permits hospitals or other qualifying employers to minimize, if not eliminate, FLSA overtime hours if paying 1.5 the regular rate for hours worked in excess of 8 hours in a workday.

Another nuance that is particularly helpful to the healthcare industry is that the federal exemption excludes those engaged in the practice of medicine from any FLSA pay requirement (salary or otherwise). While this salary exception does not extend to other medical providers (nurse practitioners, physician assistants, etc.) who might be exempt under another variation, it does generally include residents and similar practitioners.

“Non-Exempt” Doesn’t Have To Mean “Hourly” Pay

Employers and employees alike commonly assume that “salary = exempt” and “non-exempt = hourly,” but both assumptions are incorrect. Indeed, there are many ways to compensate non-exempt employees in compliance with the FLSA, as long as the employee receives (1) the minimum wage for all hours worked and (2) the overtime premium, which is due on almost all wages. For example, instead of an hourly rate, an employer might structure the base pay in one of these ways:

Struggling To Record Time

An employee who previously had no timekeeping requirements understandably might struggle with recording all hours worked. Unfortunately, any methods that make this easier can easily lead to a failure to capture all hours worked and, thus, a failure to pay overtime properly. To that end, here are some issues to consider as you apply non-exempt policies and practices to converted employees.

The FLSA Is the Floor

It is important to remember that other jurisdictions can have higher, stricter, or different wage-hour requirements. For example, some states have a higher salary threshold for the salaried, white-collar exemptions than the FLSA’s $685/week. Others might have different exemptions or exceptions, including that not all have the salary exception related to the practice of medicine. Of course, some jurisdictions also have higher minimum wage rates and/or additional overtime-type requirements. Finally, while the FLSA regulates little in the way of actual wage payments, deductions, and notification of pay terms, many states have detailed requirements and might even have different provisions for non-exempt versus exempt employees.

Conclusion

Employers that were holding out on converting employees in hopes that the new overtime rule would be once again blocked by a court took a substantial risk. At the same time, those that already have done the heavy lifting and opted to convert employees to non-exempt status might not have had sufficient opportunity to evaluate these principles before proceeding.

In either case, we recommend that you consider these principles as the employees settle into their new classification. If you believe you might make further changes this year, now is the time to consult with legal counsel and carefully evaluate which approach best achieves your unique circumstances and objectives.

For more information, contact the author at CBrown@fisherphillips.com or 404.240.4281.

Attorneys

Back to Page

By using this site, you agree to our updated General Privacy Policy and our Legal Notices.