Between 1940 and 1975, the minimum wage for exempt employees was raised every five to ten years.  In 1975, the minimum salary for exempt employees was set at $8,060 and $8,840 per year, depending on job duties.  Roughly 30 years later, in 2004, the Department of Labor (DOL) updated the minimum salary for exempt employees to $23,660 per year.  Now, the DOL is proposing an increase to $50,440 per year.

In general, an employee is considered exempt if all of the following apply.  The DOL is also discussing this criteria to make sure that it remains relevant in determining exempt status.

1.  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.

2.  The amount of salary paid must meet a minimum specified amount.

3.  The employee’s job duties must primarily involve executive, administrative or professional duties as defined by the regulations.

What does this mean for employers?  Should these changes go into effect, employers will need to make sure that the salaries for their exempt employees are following the new laws.  Alternatively, employers may decide to classify their employees as non-exempt, and therefore pay them on an hourly basis.  If this were to happen, the non-exempt employees would be entitled to overtime pay for work done in excess of 40 hours per week.

References:

The Federalist Society

Department of Labor

 

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