Nationwide Increase in Exempt Employee Salary Threshold in 2018

HELPLINE

Across the nation, states will increase the salary threshold for exempt employees in 2018. The states covered below are: Alaska, Arizona, California, Colorado, Connecticut, District of Columbia, Iowa, Maine, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, South Dakota, and Washington.

2018 Exempt Employees’ State Salary Threshold Increase

The Department of Labor (DOL) announced last year that it would be doubling the salary threshold for exempt employees. This meant that to be exempt from receiving overtime, salaried employees would need to make $47,476 for the year. In addition to the salary test, employees also have to pass a duties test to see if they qualify as administrative, executive, or professional.

The ruling was set to take effect December 1, 2016. To challenge whether or not the ruling by the DOL was valid, 21 states filed suit. The rule’s implementation didn’t immediately go into effect, however. A federal judge halted the ruling in December 2016 following President Trump’s election, allowing the DOL to decide on how it would proceed.

Without an official implementation of the ruling, it looks like the DOL may backpedal and revise the 2016 Overtime Rule. At this point, it remains unclear, and still, many states have salary thresholds increasing in 2018 despite the many employers waiting for the DOL to make a clear decision.

Exempt employees have a salary threshold of $455 per workweek as their salary threshold or $23,660 each year currently. State laws vary, however, and the result is that some states exempt employees from overtime hours while others exempt them from the state minimum wage.

Salary Threshold for Exempt Alaska Employees

Exempt employees must be paid a minimum of 2x the minimum wage of the state for the first 40 hours of a single workweek. In 2018, Alaska’s minimum wage increased to $9.85 and does not include employer provided lodging or boarding. January 1, 2018, saw the increased minimum wage and salary thresholds for Alaska.

Salary Period 2017 2018
Weekly $784 $787.20
Bi-weekly $1,568 $1,574.40
Semi-Monthly $1,698.67 $1,705.50
Monthly $3,397.34 $3,411.20
Annually $40,768 $40,934.40

 

Salary Threshold for Exempt Arizona Employees

Arizona exemptions for administrative, executive, and professional employees only exempts overtime pay; it does not exempt employees from earning the minimum wage for the state. And on January 1 of 2018, Arizona’s minimum wage increased to $10.50.

Salary Threshold for Exempt California Employees

California requires that exempt employees make at least twice the wages of a minimum wage employee for full-time employment. The minimum wage changed on January 1, 2018.

Employees in California must earn 2x the minimum wage of full-time employment to be classified as exempt employees. On January 1, 2018, the minimum wage increases to $10.50 for small business and $11.00 for employers with 26 or more employees. Additionally, many counties and cities have local minimum wages above the state’s minimum wage.

It is important to point out, however, that these minimum wages do not alter the exempt employee’s salary threshold minimum. On January 1 of 2018, California’s salary threshold increase occurred.

Salary Period 2017 Large Employer 2018 Large Employer 2017 Small Employer 2017 Large Employer
Weekly $840 $880 $800 $840
Bi-Weekly $1680 $1,760 $1,600 $1,640
Semi-Monthly $1820 $1,906.67 $1,733.34 $1,820
Monthly $3,640 $3,813.34 $3,466.67 $3.640
Annually $43,680 $45,760 $41,600 $43,680

Commissioned employees’ exemptions in California is based off the size of the employer and that the employee earns a payrate of 1.5x California’s minimum wage.

Salary Threshold for Exempt Colorado Employees

On January 1 of 2018, Colorado’s salary threshold increase occurred. To qualify as an exempt employee (either executive or supervisory) employees must earn more than the minimum wage for the hours they work in a single workweek. Additionally, professional and administrative employees must earn a salary.

The one exception comes in highly skilled employees (teachers, lawyers, doctors, etc.) do not need to earn a salary to qualify as exempt in Colorado. The exemption only requires that these positions be “salaried employees.”

These supervisory or executive employees must be paid the $10.20 per hour minimum wage for the hours they work in a 40-hour workweek. This rate recently increased on January 1, 2018.  If a supervisor works 60 hours in a week, then they must make more than $612, for example.

Salary Period 2017 for 40 hours worked 2018 for 40 hours worked
Weekly Exceed $372 Exceed $408
Bi-Weekly Exceed $744 Exceed $816
Semi-Monthly Exceed $806 Exceed $884
Monthly Exceed $1,612 Exceed $1,768
Annually Exceed $19,344 Exceed $21,216

State law requires a commissioned employee to earn a standard rate of at least 1.2x the state’s minimum wage to be classified as exempt.

Salary Threshold for Exempt Connecticut Employees

Connecticut will not see a minimum wage increase, but exempt status under state law is determined by a “short test” or that employees earn more than $475 in a single workweek. Additionally, they must be paid a salary independent of lodging, boarding, and other facilities.

Salary Threshold for Exempt D.C. Employees

D.C. law requires a commissioned employee to earn a standard rate of at least 1.5x the district’s minimum wage to be classified as exempt. On July 1, 2018, the minimum wage increased to $13.25 per hour.

Salary Threshold for Exempt Iowa Employees

Iowa will not see a minimum wage increase, but exempt status under state law is still determined by a “short test” or proving that employees earn more than $455 in a single workweek. Exempt employees must also be paid more than $500 in a single workweek and this compensation must not include board, lodging, or other various facilities.

Salary Threshold for Exempt Maine Employees

On January 1 of 2018, Maine’s salary threshold increase occurred. The threshold is now $10.00 per hour for exempt employees. The minimum salary threshold in Maine is 3,000x the minimum wage for the state. In other words, employees must make more than $30,000 a year to be exempt. However, the FLSA dictates that if its threshold for salaried employees is higher, then that threshold applies.

Salary Period 2017 2018
Weekly Exceed $519.23 Exceed $576.92
Bi-Weekly Exceed $1,038.46 Exceed $1,153.84
Semi-Weekly Exceed $1,125 Exceed $1,250
Monthly Exceed $2,250 Exceed $2,500
Annually Exceed $27,000 Exceed $30,000

Minnesota Employees

State law requires a commissioned employee to earn a standard rate of at least 1.5x the state’s minimum wage to be classified as exempt.

On January 1, 2018, the minimum wage for Minnesota employees increased to $7.87 for small employers (those with less than $500,000 in gross annual sales) and $9.65 per hour for larger ones (those who earn more than $500,000 in gross annual sales).

Nevada Employees

State law requires a commissioned employee to earn a standard rate of at least 1.5x the state’s minimum wage to be classified as exempt.

In 2018, Nevada’s minimum wage did not increase. It is based off whether or not employees have healthcare. Employees without healthcare receive a higher minimum wage.

Salary Threshold for Exempt New Jersey Employees

Administrative, executive, and professional employees are not exempt from earning the state’s minimum wage in New Jersey under its exemption. Only overtime pay is exempted. On January 1, 2018, the New Jersey’s minimum wage increased to $8.60 an hour.

Salary Threshold for Exempt New York Employees

The most complex system of minimum wage laws in the nation belongs to New York State. Every year on December 31st, the minimum wage for the state changes. These laws can differ between industry, business size, and location.

The effects are that administrative employees and executive employees need to earn a salary for the work they do in addition to lodging, board, and other allowances. Professional employees must earn at least $23,660 as there is no salary threshold set by the state.

New York City

11+ Employees

2017 December 31, 2017 December 31, 2018
Weekly $825 $975 $1,125
Bi-Weekly $1,650 $1,950 $2,250
Semi-Monthly $1,785.50 $2,112.50 $2,437.50
Monthly $3,575 $4,225 $4,875
Annually $42,900 $50,700 $58,500
New York City

1-10 Employees

2017 December 31, 2017 December 31, 2018
Weekly $787.50 $900 $1,012.50
Bi-Weekly $1,575 $1,800 $2,025
Semi-Monthly $1,706.25 $1,950 $2,193.75
Monthly $3,412.50 $3,900 $4,387.50
Annually $40,920 $46,800 $52,650
Nassau, Suffolk & Westchester Counties 2017 December 31, 2017 December 31, 2018
Weekly $750 $825 $900
Bi-Weekly $1,500 $1,650 $1,800
Semi-Monthly $1,625 $1787.50 $1,950
Monthly $3,250 $3,575 $3,900
Annually $39,000 $42,900 $46,800
New York State (Remaining) 2017 December 31, 2017 December 31, 2018
Weekly $727.50 $780 $832
Bi-Weekly $1,455 $1,560 $1,644
Semi-Monthly $1,576.25 $1,690 $1,802.67
Monthly $3,152.50 $3,380 $3,605.34
Annually $37,830 $40,560 $43,264

Employers must pay their employees 1.5x the standard rate of pay for overtime work according to the FLSA and New York wage laws. It is important to note, however, that there isn’t a clear distinction if NY wage law refers to the state or federal minimum wage for calculations.

Salary Threshold for Exempt Oregon Employees

On July 1, 2018, the minimum wage for Oregon increased to $10.75 and along with it, exempt employees’ threshold. The standard rate applies throughout the state except in certain areas where there are various higher rates.

These rates are the Urban and Non-Urban minimum wage. In July, these rates increased as well. Non-Urban minimum wage increased to $10.50, and the Urban minimum wage increased to $12.00 per hour.

The rates of pay can even vary in individual counties with some areas having non-urban and others having an urban minimum wage. And again, the rate for exemption excludes board, lodging, and other facilities.

The threshold for Oregon is set by taking the minimum wage the employee is eligible for, multiplying that by 2080 (yearly hours), and then dividing that by 12 (number of calendar months)

Standard Min. Wage 2017 (as of July 1, 2017) July 1, 2018
Weekly $410 $430
Bi-Weekly $820 $860
Semi-Monthly $888.34 $931.67
Monthly $1,776.67 $1,863.33
Annually $21,320 $22,360
Urban Min. Wage 2017 (as of July 1, 2017) July 1, 2018
Weekly $450 $480
Bi-Weekly $900 $960
Semi-Monthly $975 $1,040
Monthly $1,950 $2,080
Annually $23,400 $24,960
Non-Urban Min. Wage 2017 (as of July 1, 2017) July 1, 2018
Weekly $400 $420
Bi-Weekly $800 $840
Semi-Monthly $866.67 $910
Monthly $1,733.34 $1,820
Annually $20,800 $21,840

Oregon commissioned employees must earn a standard pay rate of 1.5x the state minimum wage.

Salary Threshold for Exempt Rhode Island Employees

Administrative, executive, and professional employees are not exempt from earning the state’s minimum wage in Rhode Island under its exemption. Only overtime pay is exempted. On January 1, 2018, the Rhode Island’s minimum wage increased to $10.10 an hour.

Salary Threshold for Exempt South Dakota Employees

Administrative, executive, and professional employees are not exempt from earning the state’s minimum wage in South Dakota under its exemption. Only overtime pay is exempted. On January 1, 2018, the South Dakota’s minimum wage increased to $8.85 an hour.

Washington Employees

State law requires a commissioned employee to earn a standard rate of at least 1.5x the state’s minimum wage to be classified as exempt. And on January 1, 2018, the state’s minimum wage increased to $11.50 an hour.

Minimum Pay for Overtime Exemption Commission Employees Increases

The Fair Labor Standards Act (FLSA) provides guidelines for commissioned employees and whether or not they classify as exempt and prohibited from receiving the overtime wages of 1.5x the standard rate for the employee. This exemption can only occur on if these three conditions are met:

  1. The employee must be employed in either the service establishment or in retail
  2. The employee must earn more than 1.5x the federal minimum wage as their base pay for the hours of overtime worked
  3. Commissions must come from 50 percent of the employee’s overall earnings

Many states provide additional benefits for employees such as setting the overtime rate at 1.5 times the state’s minimum wage instead of the federal minimum wage that is lower. This occurs in the following states: California, Colorado, Connecticut, District of Columbia, Minnesota, Nevada, New York, Oregon, and Washington.

If You Feel Your Employer Violated Federal or State Wage Laws, Seek Counsel NOW

Wage laws are complex and confusing. But you need to make sure that you receive the proper compensation for your work. If you believe that you or someone you care about has incorrectly been denied overtime pay, please get in touch with the Lemberg Law legal team. Complete our form for a FREE case evaluation or call  855-301-2100 NOW. You may be entitled to compensation for damages, injuries, lost wages or employment due to lost overtime wages.

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