Santos, Postal & Company, P.C., Here Are Your Articles for Wednesday, November 23, 2016
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Sharon Gubinsky, CPA, CFE, CGMA


On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department of Labor to update and modernize the regulations defining which white collar workers are protected by the Fair Labor Standards Act (FLSA) minimum wage and overtime standards. The salary level test is designed to help identify salaried workers who are entitled to overtime pay when they work long hours. The current salary level is outdated and no longer does its job of helping to separate salaried white collar employees who should get overtime pay for working extra hours from those who should be exempt. The last time the standard was revised was in 2004.  Through this Final Rule, the Department of Labor is updating these regulations to ensure that the FLSA's intended overtime protections are fully implemented, and to simplify the identification of overtime-eligible workers, thus making the exemption easier for employers and workers to understand and apply. These revisions will also help ensure that in the future the regulations continue to appropriately separate workers who are entitled to overtime protections and those who may be exempt.




  • This new law becomes effective December 1, 2016.
  • New salary threshold for exempt employees has increased:
    • $913 per week or $47,476 per year
    • The salary threshold will automatically update every three years based on overall

American wage growth

  • Your company must comply if any of the following apply:
    • Your organization is engaged in commerce
    • Has annual gross income of $500,000
    • Is a public agency or operates a hospital, health care facility or school
    • If none of the above applies, you may still be affected if your employees take or make calls to another state or sends or receives emails interstate.



  • Review the job descriptions for all of your exempt and non-exempt employees to ensure they are property classified under the FLSA.
  • If you are unsure of how to classify your employees visit the Department of Labor’s website: to review the white collar exemptions test.
  • Be sure to specify in every job description whether the position is exempt from overtime or hourly, non-exempt.
  • Creating a new position? Consider the implications of the classifications.  If you can design the position to fit an exemption, do so. This may mean raising the minimum salary to meet the test or adding a minimum education requirement that qualifies the position for the administration or professional exemption.
  • Some states have more generous overtime rules than the federal ones.  Be sure to check with your state labor department before making changes to employee overtime classifications.      




  • Increase salaries of current exempt employees to more than $913 per week or $47,476 per year.
  • Reduce bonuses for exempt employees whose overall compensation exceeds the new minimums.  Increase salaries by the bonus amounts.
  • Reclassify exempt employees as non-exempt and pay them hourly.  Of course, you will have to pay overtime when they work more than 40 hours per week.
  • Reclassify exempt employees and pay them on a commission or fluctuating-workweek basis.  Please feel free to contact us to learn more about the fluctuating workweek system, which pays a salary to non-exempt employees whose schedule vary from week to week.
  • Increase staffing levels to eliminate unnecessary overtime.


This new law, effective December 1, 2016, aims to protect employees who make less than $47,476 on an annual basis and who may work more than 40 hours per week. For additional information on the new overtime law, how it may affect your employees, and what you can do to prepare, please do not hesitate to contact Sharon B. Gubinsky, CPA, CFE, CGMA at or (240) 499-2053.



Sharon B. Gubinsky, CPA, CFE, CGMA is a Principal of Santos, Postal and has been a member of the firm for twenty years. She has over thirty years of experience in public and private accounting. Sharon leads the Forensic Accounting and Outsourced CFO Solutions divisions of the firm. Sharon is a member of the AICPA, MACPA, ACFE and the AWSCPA. Sharon donates her expertise by serving as Treasurer for two local not-for-profit organizations.


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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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