You’re Monitoring Minimum Wage, But What About Minimum Salary?

Thorough workforce management professionals spend time monitoring minimum wage changes in the states and localities in which they have employees working, ensuring that pay rates for hourly wage earners (non-exempt employees) are set correctly in a VMS and for payroll purposes. Much less frequently examined are the minimum salary requirements in place for exempt (salaried) workers. Did you know that several states have weekly minimums in place for salaried employees that need to be reviewed?

Yes, in Alaska, California, Colorado, Connecticut, Iowa, Maine, New York, and Oregon, state law mandates a weekly minimum salary for exempt workers. It can be just as costly for an organization failing to observe these minimums for the salaried as it is for the hourly.

Keeping tabs on minimum wage changes and conducting an impact analysis is a manageable exercise when it comes to hourly workers. Workforce management pros tackle this as a two-pronged assessment when performing regular review of pay rate updates for the non-exempt. As they verify that hourly rates are at or above the legal minimum wage in each state or locality, they are also calculating for their clients the potential impact of any changes on workforce spend.

Department of Labor Fact Sheet 17G lays out the basics on salary basis regulation, calling for a minimum of $455 per week for employees who qualify for exemptions, but there is more to the story. Even seasoned veterans of the workforce management industry may not know about the weekly minimum salary requirements enforced in the above-mentioned states for exempt workers. Complicating matters, this information is not well-publicized, making it difficult for diligent workforce managers to monitor. With this information in hand, the same impact analysis can be conducted.

It is important to note that each of the eight states requiring a minimum weekly salary for the exempt worker has special distinctions that impact the rules. In Oregon for example, minimum salaries differ between urban and nonurban areas. New York delineates by size of the hiring organization and also by county of operation. Connecticut and Iowa have specific “short tests” and “long tests” they use to determine salary minimums. The exemption types that are covered in each state also require attention. As you can see, there is a lot of variation by state and it can be challenging to ensure you are compliant in all locations.

This is why savvy practitioners turn to expert consultants like those at nextSource, who do the hard work of researching these variables and helping customers stay abreast of changes as they occur across all geographies where they may have operations. If you are not sure whether or not your organization is up to date with respect to minimum salary requirements, it is definitely worth taking the time to talk to your nextSource representative sooner rather than later.

NOTE: the Department of Labor has announced rulemaking for 2019 that may revise the regulation 29 C.F.R. part 541, which governs the exemption of executive, administrative, and professional employees from the Fair Labor Standards Act’s minimum wage and overtime pay requirements. We plan to stay tuned in to changes and will bring our customers the details of changes now, into 2019 and beyond.

This blog was provided by nextSource’s Tania Carter, human resource director.