Big Changes Ahead: Minimum Salary for Exempt Employees Must Be $47,476 By December 1, 2016
On May 18, 2016 the United States Department of Labor (“DOL”) released its final updated regulations governing overtime exemptions. The DOL’s Wage and Hour Fact Sheet detailing the changes can be found here.
Although it does not go as far as the proposed rules, the new regulations dramatically expand the number of workers eligible for overtime compensation under the Fair Labor Standards Act (“FLSA”) raising the current salary threshold for exemption of $455 per week ($23,660 per year) to $913 per week ($47,476 per year). Assuming the regulations survive legal hurdles posed by Congress, Employers will have until December 1, 2016 to comply with the new regulations. The salary requirement will then automatically adjust every three years with the first adjustment occurring January 1, 2020.
Historically, California employers safely ignored the FLSA minimum salary requirements as California’s minimum salary was higher. California requires a minimum salary of twice the minimum wage based on a full time schedule of 40 hours per week (2080 hours per year). The current minimum salary requirement for exempt employees in California is $41,600 ($20 x 2080), nearly twice the former federal requirement.
Now, everything has changed and it is time for employers to identify employees who will be impacted by the updated regulations and to plan accordingly. Employers can either increase exempt employees’ salaries to meet the new threshold (incentive bonuses and commissions will be allowed to account for up to 10% of the minimum salary requirement) or they can reclassify the employees as nonexempt. For more information about implementing the DOL’s updated regulations and any other employment related matters, contact Jennifer Douglas Phillips Gregory Walsh or Owen Dallmeyer in our Labor & Employment group.
Employment Laws for January 1, 2016
Ringing in the New Year means time to implement the latest California employment laws. Here is a summary of some of the more significant ones. For more detailed information contact Jennifer Douglas Phillips via email.
Minimum Wage: The California minimum wage increases to $10.00 per hour. Don’t forget this also means that salaried, exempt employees must now make at least $41,600 per year (twice the minimum wage).
Piece-Rate Pay (AB 1513): If you pay your employees by piece-rate, you must separately reflect rest and recovery periods as well as non-productive work on employees’ wage statements. Rest and recovery periods must also be paid at an hourly rate of either the average hourly rate of the employee for the applicable workweek or minimum wage, whichever is higher. The applicable hourly rates for everything must be reflected on the wage statement (piece-rate, rest and recovery rate, non-productive work).
Affordable Care Act Reporting: Applicable Large Employers (“ALE”), those with 50 or more full-time equivalent employees, must submit reports to the IRS by February 28 or electronically by March 31. ALE’s must also provide tax Form 1095-C to each of their employees by January 31. More information about the ACA reporting requirements can be found here.
New Postings: Make sure to obtain the latest posters and applicable wage orders and post them at your workplace. If you are unsure what wage order should be posted discuss with your legal counsel or review the Labor Commissioner’s helpful publication entitled “Which Wage Order?” (A copy of it is here) You can obtain the fully compliant postings through the Cal Chamber. Here is a link to its web store.
Seating for Employees: This is not new, but the courts will likely issue decisions this year clarifying when employers are required to provide seats to employees. Wage orders in California (governing nearly all employees) already contain provisions requiring employers to provide “suitable seating” to employees “when the nature of the work reasonably permits”. There are numerous class actions pending around the state concerning this issue. We encourage you to examine your workplace and provide seats to employees whenever possible. If you are unsure if seating is appropriate in your workplace consult legal counsel for guidance and an examination of the potential risk in not providing seats.
California’s New Minimum Wage Affects Wine Industry Employers
As of July 1, 2014 California’s minimum wage is $9.00 per hour. All employers with employees making minimum wage should review their payroll practices to ensure the change has been implemented moving forward. Employers will need to update their Wage Notices to reflect the change for new employees, but existing employees can receive notice through their paystubs.
In addition, as of July 1st all exempt employees must make at least $37,440 per year. This is based on the calculation of two times the minimum wage for the equivalent of a full time worker, which is set at 2080 hours per year. By definition exempt employees are paid for their work, not the number of hours worked. This may affect your piece-rate practices as well, so take care to ensure that employees receiving piece rate wages do not receive less than this new rate per hour.
These rates will be in effect until January 1, 2016 when the rate will increase to $10.00 per hour for non-exempt, hourly employees and $41,600 for exempt salaried employees. Finally, note that this is a state minimum wage. Some jurisdictions require even more per hour, and the employee always receives the benefit of the most generous policy.
For more information or assistance contact Greg Walsh ([email protected]) or Jennifer Phillips ([email protected]) in Dickenson, Peatman & Fogarty’s labor and employment practice group.
California’s Minimum Wage will Increase July 1, 2014
On September 25, 2013, California Governor Jerry Brown signed AB 10, increasing California’s minimum wage for the first time in six years. The current minimum wage is $8.00 per hour. This legislation will increase the minimum wage to $9.00 per hour effective July 1, 2014 and to $10.00 per hour effective January 1, 2016.
Previously proposed versions of this Bill provided the increase over a five year period and that after January 1, 2016 annual increases would be tied to California’s Consumer Price Index. The final version accelerated the increase, but does not provide for any increase after January 1, 2016.
Governor Brown called the Bill an overdue piece of legislation that will help working-class families and close the gap between “workers at the bottom and those who occupy the commanding heights of the economy.”
The federal minimum wage is $7.25 per hour. California is among 19 states and the District of Columbia that set a higher state minimum wage.
For more information or assistance on wage and hour matters contact Jennifer Phillips at [email protected]