The New Salary Basis: How Employers Manage the Unintended Consequences – First in a Series

By now you know that on December 1, 2016, there will be a regulated increase in the salary-basis test, moving the minimum amount from $455 a week to $913–a little more than double the current amount. Not only do you know it, but your employees probably do, too. This change has been well publicized, not only by the U.S. Department of Labor, which is proud to be increasing wages for a large number of employees—or so it believes—but also by law firms who advertise on television and social media.

Employees may have unrealistic expectations of either receiving overtime pay on their current rate or an increase in their salary. If these things don’t occur by December 1, an employer may face angry employees who are willing to obtain legal assistance. It’s important for employers to understand exactly where they stand well before December, so that they can respond clearly and calmly and be confident the practices they follow are legal.

If you have good practices and are confident that you have employees properly classified as exempt or nonexempt, learning more about the law may be all you need to do. If so, you would be in the minority. The wage and hour laws are the most violated laws we have, and for years neither employers nor employees really understood them. The regulations were written in the 1940s and 1950s and often don’t make sense in today’s world. They are also hundreds of pages long, and some of the regulations seem to conflict with one another. Employers often resort to “copying off their neighbor” and following practices of their competitors, or pay their employees how they were paid eons ago. These practices may not be correct.

These laws have been under the radar, but that has been changing as a result of high-profile wage-and-hour lawsuits. As it turns out, this may be a perfect time to fix any problems you may have. Employees are aware the law is changing and will be expecting changes in their pay structure. Auditing all of your positions to see if employees are properly exempt will allow you to make sure you cannot be caught off guard by changing employee expectations. Remember that MSEC can help you. We have the resources to enable you to do this yourself, or we can conduct a complete or partial audit of your pay practices to help make sure you are compliant with the complicated requirements of overlapping state and federal wage and hour laws.