The FLSA's New Salary-Basis Test

By Michael Santo, COSHRM Legislative Director and Managing Attorney at Bechtel & Santo

The federal Fair Labor Standards Act (“FLSA” or “Act”) passed in 1938 and established minimum-wage requirements, overtime pay requirements, record keeping, and youth-employment standards.  

In addition, the Act required companies to pay all its workers overtime unless the company could establish that: (1) the worker was paid a sufficient salary (which in 1938 was set at a whopping $30-per-week!). This test is known as the salary-basis test; and (2) the worker had to perform actual duties of an executive or administrator. This test is known as the duty-basis test. 

Over the years, there have been various changes to both the duty-basis test and the salary-basis test. Most recently in 2019, the DOL under the Trump administration raised the required salary threshold to $35,568, where it has stayed ever since. But that may be changing. That is, in August, the DOL proposed an increase to the FLSA’s annual salary-level threshold from $35,568 to $55,068. 

This leads to a critical question regarding the proposed salary threshold – do Colorado employers have to care about it? Well, to borrow everyone’s favorite attorney answer: “it depends.” That is, as you’ll recall, Colorado has its own rules regarding the salary-basis threshold that it established in the Colorado Overtime and Minimum Pay Standards (“COMPS”).  

COSHRM is the governing council for six local Colorado chapters as well as all SHRM at-large members in the state. We invite you to take advantage of the resources and events being offered by our SHRM-affiliated chapters.

Interested in joining a local chapter? See the bottom of this email for more information.

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