The U.S. Department of Labor (DOL) wants to tighten the rules for qualifying exempt (salaried) employees and is considering the following:
Minimum Salary — The DOL is considering a minimum exempt salary of $50,000, with inflation index adjustments annually. Keep in mind that a minimum salary amount doesn’t look at the number of hours worked… it’s the minimum you must pay an exempt employee. In California, this number is currently $37,440/year ($3,120/month) and next January (2016) the minimum moves up to $41,600/year ($3,467/month).
Managing Others — The suggestion is at least 50% of the exempt employee’s time is spent just supervising others and not performing non-exempt work at the same time. This employee must also manage at least 2-3 full-time (40 hours/week) direct reports at all times. If the total hours of the direct reports drop below 80 hours in any week, the exemption is lost and the manager would then be non-exempt (hourly).
Discretion and Independent Judgment — The DOL is working on an objective example of this phrase. One example provided thus far was for financial services: an exempt position using discretion and independent judgment analyzes income, assets, and other information on customers and then determines the appropriate financial products for that customer.
The DOL is also considering using California’s standard for exempt outside sales, which means the employee must sell away from the employer’s place of business more than 50% of the time. (As a reminder, inside sales is non-exempt.) Changes are coming!
About Your Columnist
CJ Westrick is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers all things human resources and managing people in the workplace. CJ Westrick, SPHR, has been in human resources (HR) management for over 20 years and has maintained her SPHR (Senior Professional in Human Resources) national certification since 2002. She started HR Jungle, a human resources consulting firm, in 2006 to provide senior-level HR expertise to businesses without internal HR.