HR Series - Exempt/Nonexempt and Dept. Of Labor Ruling Overview

The Department of Labor recently proposed the biggest overhaul to U.S. overtime law in history. The proposed new regulations would more than double the salary threshold that makes white-collar managers eligible for overtime pay.
The last time the DOL revised the Fair Labor Standards Act exemption regulations in 2004, overtime lawsuits exploded nationwide. And now, experts predict that trend will likely continue when the new overtime regulations take effect sometime in 2016.
For years, the DOL has continued to issue a somber report card on employers for violating the FLSA’s wage-and-hour rules. For example, in fiscal 2014, the department’s Wage & Hour Division recovered nearly $241 million in back wages for employees, up 22% from fiscal 2004. The top mistake for employers—and the most costly one—is wrongly labeling employees as exempt from overtime pay, according to the DOL.
For employers, the stakes are high. Employees misclassified as exempt can be eligible for two years’ worth of back wages (three if the violation was “willful”) at 1.5 times the hourly rate, plus liquidated damages equal to the unpaid wages. That means employees can collect up to three times their regular rate of pay.
How can you avoid becoming another target of an employee lawsuit or a DOL audit? The key is to regularly audit your workforce classifications and job descriptions to ensure you’re correctly classifying employees as exempt under the current overtime rules—and preparing for the new salary exemption thresholds coming in 2016.