Preparing for the New White-Collar Exemption Rules

You Asked.Blog

Like a lot of organizations, we are preparing for the likely changes to exemptions for white collar employees. One basic clarification; with the minimum salary requirements, is there any consideration for part-time status?

In other words, if the standard does change to $921 per week / $47,892 annually [projected to increase to $970/week in 2016], clearly a 1.0 FTE employee will need to earn $23.025 an hour or more to be exempt.

Would that threshold apply to a part-time employee? Can we prorate the weekly salary to reflect hours worked?

The Fair Labor Standards Act (FLSA) requires that employers pay employees at least minimum wage plus overtime for hours worked over 40 in a workweek. State laws bear on this by increasing the minimum wage, and in some cases, requiring overtime for thresholds other than 40 hours in a workweek. However, there are several exceptions from the basic rule, including an exemption from both minimum wage and overtime for “any employee employed in a bona fide executive, administrative, or professional capacity … . ”

For one or more of these exemptions to apply, the job duties must primarily involve executive, administrative, or professional duties as defined by the regulations, and the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed. The answer to your question involves the italicized language. 

The purpose of the so-called white-collar exemptions is to allow employers to know with certainty how much it will cost to compensate certain very-hard-working employees week in and week out without unpleasant surprises. An uncertain number of hours is at the very heart of this concept, and in fact, the presumption has always been that exempt professionals typically work more–sometimes much more–than 40 hours per week. Therefore, whether the employee works 20 hours a week or 50, the minimum salary requirement is always the same.  In other words, employers may not prorate the weekly salary for part-time exempt employees.

Send your questions to cgraves@msec.org. Please tell us if you would prefer your identity not be mentioned in our answer.