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Pop Quiz: Are you ready for the new FLSA overtime rules?

Effective December 1, 2016, the new FLSA (Fair Labor Standard’s Act) overtime rules come into effect and the minimum salary level for non-exempt employees is increasing. What this means for medical practices is that some employees you currently have categorized as exempt might actually qualify for overtime pay.

Under the new rules, to be categorized as exempt, employees must meet these three criteria:

  1. They must be paid on a salary basis, as opposed to an hourly basis, and their salary must not be subject to reduction due to quality or quantity of work;
  1. Their salary must meet a minimum salary level of $913 per week, including nondiscretionary bonuses and incentive payments of up to a maximum of 10 percent of the new standard salary level; and
  1. The employee’s primary job duty must meet the standard duties test.

A quick quiz

Seems simple enough, right? But take this pop quiz to see if you fully understand all of the implications behind the changes.

  1. True or False: An employee’s salary is an acceptable indicator of whether or not that employee is exempt.
  1. True or False: The Standard Duties Test is changing.
  1. True or False: Employers can make a catch-up payment in the event that an employee does not receive enough in nondiscretionary bonuses and incentive payments (including commissions) in a given quarter to remain exempt.
  1. True or False: If an employee does not earn enough in a given quarter to retain their exempt status, the employer has three pay periods to make up for the shortfall.
  1. True or False: Catch-up payments count toward the salary amount in the quarter in which it was paid.
  1. True or False: Violations of the FLSA’s minimum wage or overtime requirements can lead to criminal charges levied against the employer, the owner, and even the office manager.
  1. True or False: When calculating the minimum salary, employers may use nondiscretionary bonuses, but not incentive payments, to satisfy up to 10 percent of the new standard level, provided these payments are made at least on a quarterly basis.
  1. True or False: If an employer chooses not to make a catch-up payment, an employee is entitled to overtime pay for any overtime hours worked during the quarter.
  1. True or False: It is sufficient for an employee to complete their timesheet simply by writing 8:00 a.m. to 5:00 p.m. every day of the week.
  1. True or False: When in doubt, it’s best to always categorize an employee as exempt.
Answers: open

  1. False.
  1. False.
  1. True. The Department of Labor permits a “catch-up” payment at the end of the quarter.
  1. False. The employer has one pay period to make up for the shortfall.
  1. False. Catch-up payments will count only toward the prior quarter’s salary amount and not toward the salary amount in which it was paid.
  1. True.
  1. False. Nondiscretionary bonuses AND incentive payments made be used to satisfy up to 10 percent of the new standard salary level, provided these payments are made at least on a quarterly basis.
  1. True.
  1. False. All timekeeping records need to be complete and accurate, including recording times taken for lunch breaks.
  1. False. When in doubt, it’s safest to categorize an employee as non-exempt, because it’s okay to pay overtime to exempt employees, but it’s illegal to not pay overtime to non-exempt employees.


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