The Fair Labor Standards Act (FLSA) is the law that lays out the most basic federal labor regulations. The law can seem pretty straightforward, but at first glance, you may not realize that there are exemptions to many of the rules for white collar workers. Employers must carefully review these exemptions, as violations can lead to lawsuits or hefty fines.

Here are a few things that everyone should know about white collar exemptions and how they affect payroll processing:

White Collar Exemptions

  1. White collar definition: The FLSA lays out certain exemptions for employees who are designated as executives, administrative workers, professional workers, or outside sales employees. In some cases, computer employees—defined as people who do any sort of IT or computer analysis—are also exempted. Highly-compensated employees who make more than $107,432 a year are also exempt. Job titles alone don’t satisfy an exemption. For each category, the employee’s job description must fulfill specific requirements, which are laid out in the law. Employees who make less than $684 per week cannot qualify for the exemption, regardless of their job description.
  2. Exemptions for minimum wage: The FLSA lays out a minimum wage that all employees need to be paid per hour. The federal minimum wage is $7.25 per hour, though many states set a higher wage. White collar employees are exempt from this minimum wage. While these employees can technically be paid less than $7.25 an hour, they still must make at least $684 per week in order to qualify for the exemption.
  3. Exemptions for overtime pay: Non-exempt employees are required to be paid time-and-a-half for any time they work over 40 hours in a defined workweek. Employees who are paid more than $684 per week and who qualify for exemption are not required to receive overtime pay and can be paid their regular salary regardless of how many hours they work.
  4. The exemption rules just changed: Prior to this year, the salary threshold for white collar exemptions was $455 per week. The new rules went into effect on January 1, 2020. Because of the change, companies should review their policies to ensure that they remain in compliance with the FLSA.

Keeping up with the ever-changing landscape of labor law can be tough for a busy company to handle. At LBMC Employment Partners, we keep up with state and federal labor laws so that our customers don’t have to. Contact us today to learn how LBMC EP can get and keep your company in compliance.