The United States Department of Labor (DOL) recently announced an increase in the minimum salary thresholds required to categorize employees as overtime exempt under the Fair Labor Standards Act (FLSA).
Under the FLSA, business owners must pay overtime compensation at one and one-half times the employee’s regular rate of pay for any hours worked over 40 hours in a workweek unless the employee falls into an overtime-exempt category. The three most common exempt categories are the so-called “white-collar” exemptions for executive, administrative, or professional employees. In addition to performing executive, administrative, or professional functions, to be exempt from overtime pay, these employees must be paid on a salary basis and meet a minimum salary threshold.
Beginning July 1, 2024, the minimum annual salary threshold for exempt employees will increase from $35,568 to $43,888. Then, on January 1, 2025, the annual salary threshold will increase to $58,656. Beginning July 1, 2027, the minimum required salary threshold will be updated every three years.
The FLSA’s amendment also affects the salary threshold for “highly compensated employees.” Currently. highly compensated salaried employees are exempt from overtime if they are paid a minimum annual salary of $107,432 and customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative or professional employee. On July 1, 2024, the salary threshold for “highly compensated employees” will increase to $132,964. The threshold will increase to $151,164 on January 1, 2025, and will be update every three years beginning July 1, 2027.
New Jersey employers should be aware that the State’s Wage and Hour Law (WHL) incorporates the FLSA executive, administrative, or professional employee exemptions by reference. The increase in the mandatory salary minimums for overtime exemption under the FLSA will also apply to overtime exemption under the WHL.
Employer organizations have already filed suit to block the salary threshold increases. The outcome of these challenges is uncertain, and there is no court order enjoining the FLSA from enforcing the increases. Employers must therefore assume that the increases will take effect and plan accordingly.
Determining who and who is not overtime-exempt under federal and state law raises tricky questions of fact and law. Mischaracterizing an employee as exempt is a costly mistake. Contact Trimboli & Prusinowski at 973-660-1095 to schedule a consultation.
In a long-awaited decision, the New Jersey Appellate Division ruled in favor of Jim Prusinowski’s client, JerseyShore Reporting, that court reporters working in New Jersey through a court reporting agency, are exempt from contributing to unemployment taxes because they are not employees.
Since 2013 the New Jersey Department of Labor has claimed that a court reporting agency, Jersey Shore Reporting, (and all court reporters in the state) was liable to the New Jersey Unemployment Compensation fund for thousands of dollars, classifying court reporters as employees. However, since their inception, court reporters have been believed to be independent contractors and in 2010 the New Jersey Legislatures codified their independence into law.
Prior to the 2010 amendment, court reporters were not singled out as being independent. Instead, they needed to meet the generally applicable ABC test which looks to independence, location or type of work, and ability to continue in business if an engagement ends.
While the DOL argued that the statutory amendment did not change the requirement to show independence, the Appellate Division gave the Legislature credit for its expertise and acknowledged that the plain language of the law classifies court reporters as independent contractors. According to the Appellate Division, the DoL’s interpretation of the statute was clearly wrong and not supported by its language or the legislative history.
“We are pleased that the Appellate Division has confirmed the statute is clear on its face and applies without the agencies having to provide further evidence of the reports’ independence. This is an industry of business minded individuals working through ‘brokers’ to acquire work. The statute, and decision, confirm their business model and operations as solo-preneurs,” said Jim Prusinowski, who argued the case before the Court and has represented JerseyShore reporting through this entire process.
For further information on court reporters as independent contractors or other issues related to independent contractors, consult one of the experienced labor and employee attorneys at Trimboli & Prusinowski, LLC. Call 973-285-1095 to set up an appointment with an experienced attorney who can assist you and your business.
