Board Converting News, May 17, 2021

Avoiding Penalties (CONT’D FROM PAGE 14)

The Perfect Combo Get Peak Performance From Your Equipment with Matched Component Sets

utive, professional or administrative. Exemptions may also be granted for some people who are computer profession- als, engage in outside sales, or are highly compensated. (Employers can review the complete duties tests by visit- ing , then clicking on “Topics” and “Work Hours.”) Exempt individuals must earn at least $684 a week, which translates to $35,568 per year. Nondiscretionary bonuses and commissions, paid annually or more often, may be used to satisfy up to 10 percent of that level, which many believe is due for an increase. “I think you’re going to see the Biden administration raise the salary threshold, perhaps linking it to cost of living increases,” says Witte. Paycheck size alone, though, is not sufficient criteria. “Employers sometimes fail to understand that exemption from overtime requires not only meeting the salary thresh- old, but also passing the so-called ‘duties test,’” says Heerde. While the duties tests vary by exempt category, they boil down to one essential: The exempt person must exhibit sufficient independent authority to make essential

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decisions in their daily work. Just being assigned an im- pressive-sounding job title is not enough. Changes Are Coming Employers should brace for changes in these exemp- tion parameters. “The DOL is likely to take a strong look at the duties tests for white collar exemptions,” says Witte. “The language has not been tweaked in recent years to reflect the way people work today. It may become harder to prove that a certain individual exercises independent judgment and authority rather than just processes papers or follows a flow chart of actions.” As the above comments suggest, qualifying for exempt status often requires judgment calls—and that’s just where employers often get into trouble. There is a common temptation—conscious or otherwise—to classify people as exempt to avoid the costs of overtime. This is exactly the problem the Biden administration has stated it wants to address. State and local governments have also been tightening regulations and increasing inspections to en- sure that exempt personnel are really exercising manage- ment-level decision-making.

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May 17, 2021

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