FLSA Overtime Regulations

 

 
WNA LOGO 1
The Wisconsin Nonprofits Association (WNA) has been tracking information about the recent changes to the Fair Labor Standards Act (FLSA) regarding overtime compensation for employees.  Much information about changes is available through the Federal Department of Labor, however, states are allowed to enact more stringent protection of workers—and Wisconsin does so. 

Following is a summary of information received by WNA on June 7, 2016 from the Wisconsin Department of Workforce Development.

There are also documents and links to more detailed federal-level information listed on WNA’s website.  WNA will continue to track and communicate any new information as it becomes available.  Please visit our website for updates.


Current Federal Law
 Currently under the FLSA, in order to be exempt from federal overtime requirements under the white collar exemptions, employees must: 
  1. be paid on a salary or fee basis;
  2. be paid a salary at least $455 per week; and
  3. meet a "duties test" for exempt salaried executives, administrative employees, or professionals. 
 The law also contains a "highly compensated employees" test that allows employees who perform office or non-manual work and who are paid total compensation of at least $100,000 to be exempt as long as they perform just one of the duties of an exempt executive, administrative employee, or professional.   

For more detail, see the Department of Labor (DOL), Wage and Hour Division's Fact Sheet #17A, which details the requirements. 


The Basic Changes 
The changes to the FLSA's rule (29 C.F.R. part 541) are as follows: 
•            The salary minimum needed to meet the exemption will increase to $913 per week or $47,476 per year. 
•          Up to 10% of the salary minimum may from nondiscretionary bonuses and incentive payments, including commissions ($91.30 per week), as long as such payments are made at least quarterly.
•          The minimum annual compensation for exempt HCE employees will be increased to $134,004. 
•          Establishes a mechanism whereby the annual salary minimums will be adjusted every three years, beginning in January 2020.

The salary minimum was set at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently, the South).  The HCE salary minimum was set at the 90th percentile of weekly earnings of full-time salaried workers nationwide.


The Duties Test 
It is important to note that although the July 2015 proposal to modify the rule sought comment on potential changes to the duties test, no changes were adopted.


Wisconsin Requirements Affect the Analysis
More importantly, employers must keep in mind that Wisconsin has a more stringent exemption test in place.  The federal law specifically authorizes states to have stricter requirements. 

Wisconsin's duties tests contain percentage limits on non-exempt work (20% for most occupations; 40% in retail and service establishments) similar to the pre-2004 federal "long test" that – for most employers – make the federal duties test irrelevant. 

Likewise, Wisconsin's salary minimums have not been updated for many years are irrelevant to employers subject to both federal and state law ($700 per month for executives and administrative employees; $750 per month for professionals). 
 

Tips to Wisconsin Employers 
Employers subject to both Wisconsin law and the FLSA must look to the state duties test and the federal salary minimum to comply with both.   

Some employers, though, are not subject to Wisconsin's requirements and need to look to federal law only.  This includes most employees of nonprofit organizations.   

Moreover, Wisconsin law does not contain the HCE exemption, so its use is not available to Wisconsin employers subject to both laws. 


Public Employees 
Things are also slightly different for employees of the state of Wisconsin and its political subdivisions.   

Both sets of laws apply, however, when analyzing exemptions for these employees, employers must look solely to federal law since the Wis. Admin. Code § DWD 274.08 (2) provides that the state exemptions are not applicable to such employees.

Resources

 
Fair Labor Standards Act for Nonprofits PowerPoint Slides: US Department of Labor - June 7, 2016
Download Now
 
New Overtime Regulations Webinar Questions & Answers: US Department of Labor - June 7, 2016
Download Now
 
Overtime Regulations and the Impact on Nonprofits: National Council of Nonprofits - March 18, 2016
Open In New Window
 
Coverage Through State Law: National Council of Nonprofits - March 18, 2016
Open In New Window
 
Classifying Employees Correctly: National Council of Nonprofits - March 18, 2016
Open In New Window
 
Known, Unknowns, and Options for Nonprofits on the Overtime Final Rule: David Thompson, National Council of Nonprofits blog - May 19, 2016
Open In New Window
 
Compensable Time? What Nonprofits Need to Know Regarding Their Non-Exempt Employees: Venable Law Firm - May 17, 2016
Open In New Window