Impact of Increased Exempt Salary Minimum on Local Governments

Author: Brad Stewart

June 8, 2016

The United States Department of Labor’s proposed increase to the minimum salary thresholds for certain exempt employee classifications will become effective on Dec. 1, 2016. The most relevant change is that the exempt classifications for administrative employees and executive employees will require that employees receive annual salaries of $47,476 (up from $23,660) to remain classified as exempt.

Several options may be available to address the increased salary requirements, including the following:

  • evaluate tasks, duties, and internal procedures to ensure that employees who must now be classified as non-exempt do not trigger overtime;
  • consider reassignment of tasks to other employees;
  • possibly increase pay for employees who would otherwise fall below the minimum pay threshold, to keep them properly in exempt status.

While many municipalities may not have any exempt employees under the increased salary threshold, it is still advisable to review the current classifications of any exempt employees to ensure compliance with all requirements of maintaining exempt status. On a related note, a commonly unknown rule is that the Illinois Department of Labor put guidelines in effect in 2014 that require that the hours of all employees — exempt and non-exempt — be recorded and retained for at least three years. Undoubtedly, this hour recording requirement for employees classified as exempt promotes the ability for employees who challenge their exempt status to document any claim for unpaid overtime wages.

Brad Stewart

Author: Brad Stewart