One of the most contentious and controversial subjects in wage and hour law is the status of exempt employees. In theory, being exempt is supposed to come with greater flexibility, autonomy, and growth. In practice, it's often just a way to get extra work out of an employee for no additional pay.
A proposed Department of Labor (DOL) rule would reshape the overtime landscape significantly by raising the salary threshold to be exempt. Such a change would impact as many as 3.6 million employees nationwide.
What the new DOL rule would and wouldn't change
For a worker to be exempt from overtime under the "white-collar exemptions," two criteria must be met.
First, there is a minimum salary requirement. Under current law, the requirement is $684 per week or $35,568 per year. The proposed rule change would increase this threshold to $1,059 weekly or $55,068 annually. The new rule would also raise the threshold every three years based on updated earnings data.
Second, the employee's job duties must fall into one of three categories:
- The managerial exemption. Bona fide managers who have hiring, firing, and evaluation power, or comparable decision-making authority, can be treated as exempt employees. This is based on your actual job duties, not your job title.
- The learned professional exemption. This exemption applies to high-level knowledge workers, usually in jobs that typically require an advanced academic degree. Examples include architects, physicians, engineers, scientists, accountants, and attorneys.
- The administrative professional exemption. Finally, this exemption applies to employees who do advanced professional work, with a high degree of discretion and decision-making, that is focused on keeping the business itself running (as opposed to production or customer service). Some examples include human resources, IT, finance, marketing, and public relations, depending on the nature of the organization.
Raising the salary threshold means that employees who fall into one of these categories and currently make at least $35,568 but less than $55,068 would no longer be exempt. Employers that have employees in this situation will have two options. They can convert those positions to non-exempt, which means paying overtime and updating timekeeping requirements, or they can raise their salaries to at least the new threshold.
Make sure you know your rights and how to protect them
On balance, raising the threshold to be considered exempt would be great news for workers in Ohio. Thousands of employees will either be in line for immediate raises or become eligible for overtime pay.
However, it's important to remember that the wage and hour laws are complex and far too frequently violated. As we wrote last month, wage theft is a rampant problem in Ohio and across the country. Misclassifying employees as exempt is a particularly pernicious type of wage theft because it's often packaged as an opportunity for greater responsibility in growth, when in fact it's all about saving the employer money.
If you believe your employer has misclassified you as exempt or is otherwise violating wage and hour laws, you have legal rights, and the right attorney can protect them. Give us a call or contact us online for a free case consultation with Gibson Law, LLC.