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T he U.S. Department of Labor announced in May its long-anticipated changes to overtime rules under the Fair Labor Standards Act (FLSA). For many of our clients in the security industry, this regulatory change will fundamen- tally alter how businesses approach pay and overtime for their employees. Beginning Dec. 1, 2016, employ- ees who are considered "salaried" and therefore exempt from the Fair Labor Standards Act's (FLSA) minimum wage and overtime requirements must earn a guaranteed minimum salary of at least $913/week ($47,476/year) in order to be treated as such. e new threshold is nearly double that of the current minimum salary requirement of $455/week ($23,660/year), which has been in effect for 12 years. What does this mean for you? Quite simply, if you have employees you are paying on a salaried, "exempt" basis who are earning less than $47,476 per year, you will either need to increase those salaries to the new minimum or reclassify those employees as "non-ex- empt," track their time and pay them overtime for all hours worked in excess of 40 hours in a pay period. Note that some states have overtime provisions that require time-and-a-half pay for time in excess of eight hours within a single workday. Established in 1938, the FLSA gov- erns many foundations of employ- ment law, including minimum wage, overtime, minimum age for workers, calculation of time worked, deduc- tions from pay and recordkeeping requirements. e terms "exempt" and "non-exempt" mean that an employee is either exempt or not exempt from the minimum wage and overtime pro- visions of the law. ere are three criteria to look at to determine who is eligible to be exempt from the minimum wage and overtime provisions of the FLSA: 1 Salary Test: To be consid- ered exempt, in most cases an employee must be paid on a salary basis and must receive a guar- anteed salary each week. at salary cannot be reduced based on quality or quantity of work; in fact, there are very few scenarios where an exempt employee's salary can be docked. 2 Minimum Salary Test: Right now, an exempt employee must be paid at least $455/week ($23,660/year) — anything below that requires that the employee be designated non-exempt and thereby paid overtime for work exceeded 40 hours per week. Effective Dec. 1, 2016, the new salary minimum will be $913/ week ($47,476/year). 3 Duties Test: While most news coverage has focused on the increase to the over- time pay provision, a properly clas- sified exempt employee must also pass the duties test. Not only must an exempt employee be paid a mini- mum salary, they also must perform special duties that make them eligible for this exemption. ese are what the Department of Labor calls the "White Collar Exemptions." To qualify as exempt, an employee's primary duties have to meet the standards in one of the following categories: • Executive: Management of the organization or a customarily recog- nized department or division. is is true management — not usually a working supervisor — based on actual duties and level of bona fide, indepen- dent management authority, and not on job title alone. • Administrative: High-level office or non-manual work directly related to management or general operations (such as accounting, IT, HR, market- ing). ey include independent judg- ment and decision-making discretion on matters of significance. • Professional: Work requiring advanced knowledge in science or other field of learning customarily obtained by a prolonged specialized intellectual instruction, i.e., higher education (not vocational education). In other words, much of the knowl- edge required is typically learned by going to college, not on-the-job. • Computer: Design, development, creation, testing and modification of computer systems and programs. is does not apply to help desk employees and roles involved in the manufacture, operation, repair or maintenance of computers. Exempt computer pro- fessionals may, in lieu of passing the salary test, be paid by the hour if they make at least $27.63 per hour. • Outside Sales: Making sales or obtaining orders or contracts, and work is largely performed away from the employer's premises, i.e., cold-call- ing, identifying and visiting prospects, etc. Insides sales and customer service 24 Security Dealer & Integrator / www.SecurityInfoWatch.com July 2016 People Power Overtime Pay Changes Official New FLSA minimum wage and overtime rules go into effect Dec. 1 — here's what you need to know People Power