WAGE & HOUR RULES - ALMOST A BIG NOTHING
April 23, the Department of Labor (DOL) released the long
awaited updates to the wage and hours regulations. Employers
have until August 23, 2004 to be in compliance.
biggest change is that the minimum salary an exempt or salaried
employee must make to be considered exempt will be $23,660
or $455 per week. This means that any person on your payroll
who is considered an exempt employee and is making less than
this amount must either become a non-exempt employee or receive
a salary increase to at least $23,660 per year. What this
does NOT mean is all employees making $23,660 or more now
automatically qualify as exempt employees. Employees making
more than the minimum salary must still qualify under the
executive, professional, administrative or outside sales exemptions.
qualify for an executive exemption, the employee must direct
the work activities of two or more people and have the authority
to hire and fire or to recommend that employees be hired or
fired. In reviewing the exempt status of executive employees,
this factor will be given “particular weight”.
No one is really sure what this means.
DOL has stated that there is no significant difference between
the old regulations and the new regulations on what qualified
as a professional exemption.
for the administrative, computer professional and outside
sales exemptions, there are very few changes from the previous
standards. However, one change that could become significant
is the DOL changed the requirement that exempt employees spend
no more than 20% of their time performing non-exempt work.
Instead, the new regulations focus on the “primary duties”
of the employee to qualify as exempt. This is another area
that will be open to interpretation and the standards are
still not clear.
from pay of exempt employees has been clarified somewhat.
Employers will now be allowed to impose disciplinary unpaid
suspension of a minimum of one full day for serious conduct
violations such as harassment, drug use or safety infractions.
a very conservative approach to your workforce. A great majority
of the wage and hour class action lawsuits involve the definition
of exempt status. This is a great opportunity to re-classify
your employees correctly. With all of the media attention
on this issue, employees and plaintiff attorneys are studying
these new regulations closely. One of the objectives of the
new regulations is to cut down on the number of lawsuits filed
and the multi-million dollar settlements as a result of wage
and hour violations. These changes may have the opposite effect
– especially at the beginning of the implementation
an example of what not to do. Recently, a technician for a
company was changed from non-exempt status to exempt status
because the management of the company thought he was making
too much overtime. The new rules are clear, a technician is
a non-exempt employee. The fact that the employee is working
too many hours has no bearing on their status as an exempt
or non-exempt employee.
this rule of thumb – “When in doubt make, it non-exempt”.