Effective 12/1/16, new federal overtime rules will affect the minimum salary threshold that employees must meet before they can be classified as exempt from overtime. You can find information in Determining Exempt or Nonexempt Employee Status. As the compliance date nears, the HR Library will be updated with additional information.
Federal and state laws exempt certain employees from wage and hour requirements, especially overtime pay and meal and rest break requirements. If you have a problem distinguishing between exempt and nonexempt employees in your company, you are not alone. Some of the largest multimillion-dollar awards of back pay by the courts stem from employers’ misclassification of nonexempt employees as exempt from overtime.
The subject is particularly difficult for California employers, because the state’s exemption requirements create more restrictions than federal law. As defined in the Industrial Welfare Commission (IWC) Wage Orders, California’s requirements exceed even the federal standards adopted by the U.S. Department of Labor in 2004, making those federal standards generally irrelevant to California employees.
However, in May of 2016, the Department of Labor (DOL finalized revisions to federal overtime rules, including revising the federal minimum salary threshold. These federal overtime rules impact California employers because they contain a minimum salary threshold for exempt status that is higher than California’s requirement. You can find more information in Determining Exempt or Nonexempt Employee Status.