Everyone scrambles during the busy holiday season, and it appears the Department of Labor is no exception. We expect to have an update from the DOL anytime now on the salary threshold increase for exempt employees. By all accounts, it is expected to be a significant bump from the last one in 2019, which was the first increase in a decade: anywhere from $46,800 to $52,000 annually. Keep in mind, many states already have a higher threshold or have recently announced significant increases for 2023.
What does this mean for you as an employer? It does not mean just bumping-up each salaried employee’s compensation to meet the new standard! This is the time to take a hard look at your employees’ classifications. Improper classification is a costly mistake to make–but can be avoided. Pay is just one aspect of the Fair Labor Standards Act test: employers must apply the law’s ‘duties’ test first to determine whether an employee qualifies for exempt rather than non exempt (hourly) status. Many salaried positions do not meet the duties test, which is the threshold issue to apply before the salary inquiry.
Have too much on your to do list this time of year? Want to start the New Year off right? We have helped hundreds of employers nationwide painlessly comply with federal and state wage and hour obligations. Check out our fixed fee Exempt or Non Exempt Classification Overview. We can help.