Changes to Minimum Wage & Overtime Pay
Louisiana REALTORS • February 13, 2020
DO YOU KNOW WHO YOUR EXEMPT EMPLOYEES ARE?
RECENT CHANGES TO MINIMUM WAGE AND OVERTIME PAY REQUIREMENTS UNDER THE FLSA
By: Patricia B. McMurray, JD, and Melissa M. Grand, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, Chase Tower North, 21st Floor
Baton Rouge, Louisiana 70801
There are many jobs in the real estate industry. Within a real estate company, there are, for example, brokers, agents, office managers and assistants. Although generally, company owners may set compensation levels as agreed to by the employer, there are some federal and state requirements that govern, including the Fair Labor Standards Act (“FLSA”).
The Fair Labor Standards Act: Are your employees “exempt” or “non-exempt”?
The FLSA is a federal law that governs wage and hour issues for employers. Under the FLSA, most employees must be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.1 However, the FLSA provides an exemption from the minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees, and also certain computer employees.2
Why are employee classifications as “exempt” or “non-exempt” important?
In the real estate context, you may have employees that are “exempt” or “non-exempt” under the FLSA. Properly classifying those employees for purposes of payroll is critical. If an employer incorrectly classifies an employee as “exempt,” who is in fact “non-exempt,” the employer may be liable for unpaid overtime owed to that employee, plus penalties. Further, employers who willfully violate these laws may face potential criminal charges. In short, misclassifying an employee can be costly and may lead to litigation.
Determining whether an exemption applies to allow an employer to avoid paying overtime requires a fact-intensive analysis. Employers should use extreme care in making classification decisions. Even an innocent misclassification could potentially result in the employer facing liability for unpaid wages, with monetary penalties, plus attorney’s fees.
How do I determine if an employee is “exempt” under the FLSA?
A position’s title does not determine whether that position is “exempt” or “non-exempt.” Rather, to be considered “exempt” under the FLSA, an employee must generally satisfy all three of the following tests:3
- Duties test: The employee’s “primary duty” must be the performance of exempt work, as defined by the FLSA regulations.4
- Salary-level test: An employee must be compensated on a salary basis at the minimum weekly rate set forth in the FLSA regulations.5 Effective January 1, 2020, the minimum salary requirement increased from $455 per week to $684 per week (equivalent to $35,568 per year) for the administrative, professional, and executive exemptions.
- Salary-basis test: With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.6
New DOL Rules Effective January 1, 2020
The Department of Labor (“DOL”) announced a new final rule effective January 1, 2020 which updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the FLSA minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses/commissions towards meeting the salary level.7 Key provisions of the DOL’s final rule are outlined below.
- Minimum Salary for Administrative, Professional, and Executive Exemptions
Effective January 1, 2020, the minimum salary requirement for the administrative, professional, and executive exemptions increased from $455 per week to $684 per week (equivalent to $35,568 per year). This means that in order to qualify for one of these overtime exemptions, employees must be paid a weekly salary of at least $684 and continue to satisfy the applicable duties tests. - Inclusion of Nondiscretionary Bonuses in Minimum Salary Requirement
Effective January 1, 2020, employers are allowed to use nondiscretionary bonuses, incentive payments, and commissions to satisfy up to 10% of the minimum salary requirement for the administrative, professional, and executive exemptions, as long as these forms of compensation are paid at least annually. Such bonuses include, for example, nondiscretionary incentive bonuses tied to productivity or profitability (e.g., a bonus based on the specified percentage of the profits generated by a business in the prior year).8 - Highly Compensated Employee Exemption
Effective January 1, 2020, the total annual compensation requirement for the "highly compensated employee" exemption raised from $100,000 to $107,432 per year (at least $684 must be paid on a weekly salary basis). So, highly compensated employees performing office or non-manual work and paid total annual compensation of $107,432 or more (at least $684 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee.9
What happens if an “exempt” employee’s salary falls below the new threshold in the DOL’s rule effective January 1, 2020?
If your employees’ previously classified as “exempt” salaries now fall below the new threshold under the DOL’s rule effective January 1, 2020, you generally will have to either:
- Raise the exempt employees’ salaries to meet the new salary requirement; or
- Reclassify the employees as non-exempt and pay them overtime when they work more than 40 hours in a workweek.
You will need to consider which of these options makes financial sense for your business. It is important to consider the number of hours the employees typically work in a workweek as well as the employer’s ability to manage potential overtime hours.
Failure to properly classify employees as “exempt” or “non-exempt” under the new requirements could expose an employer to liability for unpaid wages, together with monetary penalties and attorney’s fees and possible criminal penalties.
1 See 29 U.S.C. §§ 207(a)(1), 213(a)(1).
2 See 29 U.S.C. § 213(a).
3 See generally Ford v. Lincoln Par. Fire Prot. Dist. No. 1, 52,067 (La. App. 2 Cir. 8/15/18), 254 So. 3d 44, reh'g denied (Sept. 20, 2018), writ denied, 2018-1737 (La. 1/8/19), 259 So. 3d 1026; Baden-Winterwood v. Life Time Fitness, Inc., 566 F.3d 618, 626-27 (6th Cir. 2009); see also 29 C.F.R. § 541.700 (duties test); 29 C.F.R. § 541.600 (salary-level test); 29 C.F.R. § 541.602 (salary-basis test).
4 29 C.F.R. § 541.700(a).
5 29 C.F.R. § 541.600(a).
6 See 29 C.F.R. § 541.602(a).
9 See https://www.dol.gov/whd/overtime/fs17a_overview.pdf
(DOL guidance discussing the duties of an exempt executive, administrative or professional employee.
To qualify for the executive exemption, the employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise, the employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and the employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
To qualify for the administrative exemption, the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
To qualify for the learned professional exemption, the employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. See id.)
DISCLAIMER:
These materials are to be used for informational purposes and should not be construed as specific legal advice. These materials are not designed to cover every aspect of a legal situation for every factual circumstance that may arise regarding the subject matter included.
This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice. The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission.
Week seven of the 2026 Regular Session was one of the most active weeks yet for legislation affecting the real estate industry. Louisiana REALTORS® remained heavily engaged as lawmakers advanced bills dealing with property disclosures, appraiser liability, rent regulation, insurance, blight, redevelopment and other issues that directly affect real estate professionals, property owners and consumers across the state. One of the most important bills this week was HB 1166 by Rep. Kim Carver , which would require disclosures for vacant residential property. The bill was reported from House Commerce with amendments on a 14-0 vote and then amended on the House floor, ordered engrossed, and passed to third reading. Louisiana REALTORS® testified on the bill in committee and worked closely with the author to better posture the legislation. Amendments advanced by our team were accepted by the author, helping improve the bill while preserving a practical disclosure framework that increases transparency without creating unnecessary confusion in the transaction process. Another closely watched issue this week was consumer-fee disclosure legislation. HB 617 by Rep. Mandie Landry moved this week, advancing from House Commerce and then the House floor, while HB 580 , another hidden-fee disclosure bill touching real estate transactions, remains pending. Louisiana REALTORS® is opposed to these measures in their current form to the extent they apply to real estate professionals because they are not well-tailored to the realities of real estate transactions, where many costs are negotiated, variable or controlled by third parties. Louisiana REALTORS® testified in opposition to the bills we oppose and is actively working with the author to better posture the legislation and remove real estate professionals from its scope altogether. On HB 472 by Rep. Alonzo Knox , the rent stabilization bill, the author is expected to try to bring the measure back before the committee next week with amendments. Even so, Louisiana REALTORS® remain opposed to the bill on principle. Price gouging is already illegal under existing law, and government-imposed rent regulation is not the right answer to housing affordability challenges. Louisiana REALTORS® testified in opposition to the bill and continues to oppose the measure because policies like this risk discouraging investment, reducing housing supply, and creating further market distortions rather than solving the underlying problem. HB 468 by Rep. Troy Hebert , which regulates the wholesale of residential real property, remains pending in the Senate Commerce Committee and continues to be an important bill for the industry. Likewise, HB 1027 by Rep. Troy Hebert , dealing with appraiser liability, had a strong week, passing the House 90-0 and moving to the Senate. Both measures are significant because they promote greater clarity, consumer protection and confidence in the real estate marketplace. Blight and redevelopment issues also remained active. HB 284 by Rep. John Wyble , which would allow certain local governments to expropriate blighted property through a declaration-of-taking process, remains subject to call and continues to raise serious concerns about private property rights. By contrast, HB 214 and HB 217 by Rep. Chance Henry , which create tax incentives for the rehabilitation of blighted property, represent a more constructive redevelopment approach by encouraging reinvestment rather than expanding government taking authority. Insurance legislation also remained a major focus this week, with multiple bills heard that could affect homeownership costs, market stability and post-storm recovery. Measures dealing with Louisiana Citizens assessments, pre-suit insurance claim review, the Fortified Homes Program and insurance market transparency all carry real implications for affordability and transaction viability. In Louisiana, insurance remains one of the most important issues affecting the real estate market, and Louisiana REALTORS® continues to closely track that legislation. Taken together, week seven showed that Louisiana REALTORS® remains actively engaged where it matters most: supporting practical transaction standards, protecting private property rights, testifying for and against legislation when necessary, pushing back on unworkable regulation and rent-control-style policies, and advancing policies that strengthen housing opportunity and market stability across Louisiana. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
NAR is pleased to share the latest consumer guide helping buyers navigate shifting interest rates. The one-page guide covers how lenders set rates, the impact of small shifts on monthly payments and strategies to get the lowest rate possible. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow up to two weeks for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Navigating Interest Rate Shifts Financing a Renovation When You Buy Staging Your House for a Sale Spotting Deepfake Scams in Real Estate Are You Ready to Invest in Real Estate? Thank you for your continued engagement with the “Consumer Guide” series and for sharing the resources with prospective clients to ensure they have the information they need to find success in their home buying or selling journey. Remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for the next consumer guide, which looks at how solar installations may impact home sales transactions.
Louisiana REALTORS® spent week six of the Legislative Session actively engaged on several bills at the Capitol impacting core industry priorities, including private property rights, affordability, redevelopment and transaction-related regulations. Most of the meaningful activity remained in the House, where lawmakers continued advancing measures with direct implications for the real estate market. HB 284 by Rep. John Wyble , which would authorize certain local governments to expropriate blighted property by declaration-of-taking, failed on final passage in the House Tuesday by a 48-47 vote, and remains subject to reconsideration. Meanwhile, HB 472 by Rep. Alonzo Knox , which would authorize rent stabilization at the local level, was voluntarily deferred in committee following testimony from Louisiana REALTORS® and our partners at the Louisiana Apartment Association effectively ending its path this session. This marks a significant win, as rent control policies do not address housing supply challenges and instead risk further market distortion. In House Commerce, several key bills moved forward. HB 1027 by Rep. Troy Hebert , which clarifies that appraisers are not liable for a seller’s failure to meet smoke and carbon monoxide detector requirements, passed committee unanimously and is now slated for a House floor vote. This common-sense measure protects appraisers and helps preserve efficiency in the transaction process. HB 673 by Rep. Tammy Phelps , which would have imposed new security camera mandates on certain blighted properties, was also voluntarily deferred following industry opposition. Additionally, HB 426 by Rep. Phelps , which addresses criminal blighting and expands enforcement liability, remains under consideration. Louisiana REALTORS® is monitoring this bill closely to ensure efforts to address blight do not unintentionally discourage investment or redevelopment. We continue to track broader market integrity and redevelopment efforts. HB 468 by Rep. Hebert , addressing residential wholesaling, has now moved to the Senate after unanimous House passage. HB 217 by Rep. Chance Henry , which provides tax incentives for the rehabilitation of blighted property, also remains active in the Senate and represents a constructive approach to redevelopment. Looking ahead, the House Commerce Committee will consider HB 1166 by Rep. Kim Carver next week, which addresses disclosure requirements for vacant residential property. Louisiana REALTORS® supports clear, consistent consumer disclosures and have been working closely with the author and the Louisiana Real Estate Commission to ensure the bill is structured to promote transparency while maintaining practical standards and avoiding unintended liability for real estate professionals. Overall, the House carried the bulk of real estate activity this week, while the Senate saw limited movement on major REALTOR® priorities. As the session continues, Louisiana REALTORS® remains focused on protecting private property rights, opposing harmful market interventions, supporting responsible redevelopment and advancing policies that strengthen real estate transactions for both consumers and our members. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
