New Update to Fair Labor Standards Act Requires Employers
to Pay Salaried Employees a Minimum of $47,476 or
Start Paying Overtime Starting December 1, 2016

russia-95311_1280Do you or someone you know make less than $47,476 per year as a salaried (non-hourly) employee? If you are, you are about to receive a major benefit thanks to new updates to the Fair Labor Standards Act that takes effect December 1, 2016. The new law will require your employer to increase your salary to at least $47,476 or convert you to an hourly employee that is entitled to be paid overtime for over 40 hours of work, and meal/rest breaks.   Read on to learn about how you are affected and what your rights are.

The New Law

The U.S. Department of Labor recently updated federal wage standards for salaried (non-hourly) employees considered “exempt” from the protections of federal labor laws.  Federal labor laws (FLSA) exist to provide minimum protections for employees, for example, by requiring the payment of minimum wages, providing meal breaks, rest breaks, and the payment of overtime for hours worked over 40+ per week.  However, FLSA only applies to certain types of employees in certain types of work, and they are called “non-exempt” employees, meaning, employees who are not exempt from receiving the protections. Exempt employees, meaning, employees who are exempt from receiving FLSA protections, do not have to receive overtime, meal breaks, rest breaks, or other benefits, because they are considered to be compensated sufficiently and in a type of work that is not considered to be subject to workplace abuse. These categories include “executive” employees, such as managers and supervisors, “administrative” employees, such as assistants, secretaries, administrative assistants, etc., and “professional” employees (such as accountants, lawyers, etc.) as well as creative employees (artists, singers, writers, etc. in creative professions).

For the rest of the employee world, the FLSA protections offer good benefits to non-exempt employees, such as requiring minimum wages, lunch breaks, rest breaks, and not the payment of overtime for hours worked over 40+ and double-time (double pay) in certain circumstances.

Most exempt employees are paid on a salary basis. This means that as a salaried employee, you are not entitled to overtime, meal breaks, or rest breaks.  An employer can make you work 50, 60, 70 (or more) hours a week and you are not entitled to a penny more for all of your effort.

How Do I Know if My Occupation Duties are “Exempt” or “Non-Exempt”? 

There are 2 tests used to figure out whether an employee can be exempt or nonexempt: your occupation and the amount of your salary.

Your Occupational Duties. First, there are a few main categories of work that are generally considered “exempt”:

  • Executive
  • Professional
  • Administrative
  • Computer-related occupations
  • Creative occupations

If your duties fall into in one of these fields, it is likely that you are exempt. However, the test does not end there. You must make a certain amount of money, to be considered exempt. The way the law looks at it, if you are making X amount of money, you are OK and do not need federal labor laws to protect you. Federal labor laws are focused on protecting lower-wage earners, who may not have the means or leverage to fight for their rights to be treated fairly by employers.

Your Salary Amount.  In addition, to qualify as an “exempt” employee (meaning, no overtime or meal/rest breaks), your employer  must pay you a certain amount. The current minimum wage for salaried employees is $23,660. This number is so low, however, that employers have rarely ever had to worry about it.

If your employer does not pass both of these tests, you are not considered exempt, and you MUST be paid overtime and given meal/rest breaks. If you are not, you are essentially a victim of wage theft, and could be entitled to compensation for the money you may have been shortchanged. Labor laws are brutal for employers — they could owe you an additional $1,000, but when you add all of the layers of penalties, attorneys’ fees, interest, and costs that labor laws impose on employers who violate the law, the amount you are owed is usually exponentially higher.

Are you not sure whether you are or should be exempt or non-exempt? Take our Exempt or Non-Exempt Quiz.

What Does the New Law Do? 

If you are paid on a salary basis (not hourly), and you currently make less than $47,476 per year, the new FLSA law is going to affect you.  Here’s how the new law works:

  • Your employer MUST increase your salary to $47,476, starting December 1, or else you will no longer be deemed an “exempt” employee.
  • You will then be entitled to overtime for hours worked over 40 per week and 8 hours per day.
  • Your employer must make these changes effective December 1. December 1 is a Thursday, so the change must be made effective with the payroll payment for that week.

If your employer does not make a change, then they are going to be immediately in violation of federal labor laws.

The Minimum Salary

The minimum salary of $47,476 that starts on December 1, 2016 will be updated every 3 years. It is going to increase again in 2020 and every 3 years after.  So, if you are a salaried employee, there will be more pay raises to look forward to.

Your Benefits as a Non-Exempt Employee

As a non-exempt employee, you would have many benefits and protections under federal labor laws:

  • You have to be paid overtime if you work more than 40 hours per week, and receive 1.5 x your regular pay
  • You have to be paid double-time (2x your regular pay) if you work more than 60 hours a week
  • You are entitled to meal breaks
  • You are entitled to rest breaks
  • You are entitled to be paid on time
  • And various other protections

In addition, depending on the state you live in, your state’s labor laws could provide even further protections for you.

Reporting Wage Theft and Violations of Labor Laws

If you are concerned that your employer is violating labor laws and not paying you properly for all the work you have performed, it is important that you contact an attorney right away. You can confidentially report your matter using the below form for further investigation:

Getting Legal Help

readreviewssgAXIS Legal Counsel is an employment law firm representing clients in numerous kinds of lawsuits and disputes involving some of the nation’s largest employers. Whether it is sexual harassment, other kinds of harassment, discrimination, race discrimination, pregnancy discrimination, medical/disability discrimination, racial harassment, retaliation, hostile work environment, wage/hour, workplace bullying, or other claims, AXIS Legal Counsel is experienced in the field of employment and labor law and focused on providing high-quality legal service.

For information on retaining AXIS Legal Counsel to represent you or a loved one with an employee rights’ claim, contact or call (213) 403-0130 for a confidential consultation, or visit our Employee Rights Practice or Individual Rights portal. AXIS is a Los Angeles, California law firm that provides victims of labor and employment law violations with aggressive representation to pursue the maximum extent of their rights.


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