We finally have a definitive answer to the status of the Overtime Rule
that was blocked by an injunction in November, just before it was scheduled
to take effect on
December 1, 2016. As for now, there will be no change to the minimum pay for exempt employees
at the federal or state level. As a reminder, the minimum pay rates for
employees classified as exempt are (and remain) as follows:
· In California for companies with 25 or fewer employees: $800
per week (equal to $41,600 per year)
· In California for companies with 26 or more employees: $840 per
week (equal to $43,680 per year)
· Outside of California: $455 per week (equal to $23,660 per year)
A few things to note:
· If a replacement rule is not introduced, the minimum pay for
exempt employees in California will increase each year on January 1st.
I will send out reminders as to what the new minimum pay rate will be
as we approach those dates.
· In addition to being paid the minimum salary, employees must meet
certain duty requirements to be classified as exempt from overtime. Contact
us today to obtain the list of the applicable California and Federal (for
employees outside of CA) exemptions for your review. Note that in order
for an employee to be classified as exempt from overtime, they must meet
ALL of the duty requirements of one of the applicable exemptions AND they
must earn the minimum pay as listed above. If either of those do not apply,
the employee is eligible for overtime in accordance with state and federal law.
Further Regulatory Developments May Be Forthcoming
The U.S. District Court for the Eastern District of Texas has invalidated
the U.S. Department of Labor's (DOL) 2016 overtime rule, which sought
to alter the salary level needed for executive, administrative, and professional
employees to be deemed exempt from federal minimum wage and overtime pay
requirements. While this court ruling is likely to end the principal litigation
over the rule, the DOL is still examining whether to adjust the salary level.
How Should Employers Move Forward?
For now, executive, administrative, and professional employees will generally
continue to qualify for an exemption from the federal minimum wage and
overtime pay requirements if they are compensated on a salary basis at
a rate not less than $455 per week ($23,660 annually) and perform certain
job duties outlined by the DOL. However, on July 26, 2017, the DOL published
a request for information (RFI) seeking new public input on whether to
revise the salary level for the executive, administrative, and professional
employee exemptions, a move which may be a precursor to a new rule altering
those exemptions. If there are any further changes, we will issue an updated
here to read the district court's ruling.