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.
Louisiana REALTORS® closed out Week 12 of the 2026 Regular Session in the final push toward sine die, with several priority bills either crossing the finish line, landing on the Governor’s desk, or moving through the last major stage of session. The headline for the association is a major win on HB 468 by Rep. Troy Hebert, the residential wholesaling bill, which cleared conference committee with the fixes Louisiana REALTORS® was seeking and was scheduled for final House action on May 29. With the constitutional deadline for third reading and final passage falling on Friday, May 29, and sine die adjournment set for Monday, June 1, the last hours of session became decisive for the remaining bills still in motion. The lead priority remained HB 468 , which is the flagship Louisiana REALTORS® package bill on residential wholesaling. After the House rejected Senate amendments 91-0 on May 20, the bill moved into conference committee rather than dying. House conferees were named as Rep. Troy Hebert, Rep. Phillip Deshotel, and Rep. Jacob Landry, while Senate conferees were named as Sen. Miller, Sen. Allain, and Sen. Connick. The conference committee report was received by both chambers on May 27, and the bill was then scheduled for final House action on May 29. This remains one of the most important bills of the session for the real estate industry because it creates a clearer regulatory framework for residential wholesaling, strengthens consumer protections, and gives the Louisiana Real Estate Commission enforcement authority over the practice. The session also produced a strong slate of enacted real estate, housing, and property-management wins. HB 1027 , the appraiser liability bill, was signed by the Governor as Act No. 187 on May 15 and becomes effective August 1, 2026. HB 292 , dealing with security deposits, was signed as Act No. 63 on May 11 and also becomes effective August 1, 2026. HB 297, expanding lease termination protections for stalking and cyberstalking victims, was signed as Act No. 64 on May 11. HB 300 , dealing with appraisal thresholds for bank-owned property, was signed as Act No. 149 on May 15. Taken together, these measures represent meaningful wins for appraisal certainty, leasing, property management, and transaction stability. Several additional REALTOR®-relevant measures cleared the Legislature and moved to the Governor’s desk by the close of Week 12. HB 1166 by Rep. Kim Carver, the vacant residential property disclosure bill, passed the Senate 38-0 on May 25 and was sent to the Governor on May 27. This is one of the most important real estate bills of the session because it closes an existing gap in Louisiana law for vacant residential properties and should help reduce late-stage surprises involving condition issues, access, utility status, and other material facts that can derail transactions. HB 1187 , dealing with Louisiana Citizens emergency assessments, was sent to the Governor on May 26 and remains an important insurance-affordability measure for homeowners across the state. HB 217 , the optional blight rehabilitation tax exemption bill, was sent to the Governor on May 21 and, together with HB 214 , strengthens the redevelopment toolkit for returning derelict property to commerce. On the constitutional amendment side, Louisiana REALTORS® also saw meaningful progress on broader property-tax and redevelopment issues. HB 214 , authorizing a property tax exemption for rehabilitated blighted or derelict properties, became Act No. 272 and was sent to the Secretary of State for placement on the ballot. SB 180, allowing the surviving spouse of a deceased veteran with a service-connected disability to transfer an expanded property tax exemption, became Act No. 39 and was likewise sent to the Secretary of State for ballot placement. These measures remain relevant to neighborhood revitalization, property-tax fairness, and broader housing stability across Louisiana. Insurance and mitigation policy continued to matter through the final days of session. HB 759 , relating to fortified roof endorsement offers, remained alive on the Senate floor subject to call and needed final Senate passage by the May 29 deadline to survive. That bill remained important because fortified roof policy sits directly at the intersection of mitigation, homeowner resilience, and insurance affordability. At the same time, slower-moving insurance measures such as HB 408 on non-renewal protections for homeowners who timely mitigate and HB 1210 on pre-suit claim review for residential property insurance did not advance this session, but both remain relevant to the longer-term insurance affordability discussion. Week 12 also highlighted the value of Louisiana REALTORS®’s defensive work. HB 617, the hidden-fees bill, stalled in Senate Commerce and effectively ran out of time. That was a meaningful defensive win, as the concern throughout was that broad fee-disclosure language could have unfairly placed liability on real estate professionals for charges they do not control, including fees set by lenders, title companies, insurers, government entities, and other third parties. HB 472 , the rent stabilization bill, remained dead after being involuntarily deferred, which is another meaningful win from a property-rights and housing-supply standpoint, though similar language always remains worth watching late in session. HB 750, dealing with automatic renewal contracts, remained alive on the Senate floor subject to call and continued to require defensive monitoring so that broad subscription language would not bleed into leases, property management agreements, association dues, or nonprofit and association activity. The broader civil justice and cost environment also remained part of the policy picture, even where bills stalled. HB 437 , dealing with expert witness fees, and HB 1089 , dealing with CARE Accounts, both passed the House but stalled in Senate Judiciary A. While they did not advance this session, they remain part of the larger conversation around litigation costs, insurance affordability, and the long-term cost structure affecting property owners, housing providers, and small businesses. The bottom line for the 2026 session is that it was a strong one for Louisiana REALTORS®. The association’s flagship wholesaling bill, HB 468 , cleared conference committee with the fixes we wanted and moved to final House action. Four major REALTOR®-relevant bills were already enacted into law: HB 1027, HB 292, HB 297, and HB 300 . Two property-tax constitutional amendments, HB 214 and SB 180 , are headed to the ballot. Three additional bills, HB 1166, HB 1187, and HB 217 , reached the Governor’s desk. On defense, rent stabilization was stopped, the hidden-fees bill stalled, and problematic consumer language in other measures was monitored closely through the final days of session. Louisiana REALTORS® remained engaged through the end on every issue affecting real estate transactions, mortgages and lending, insurance affordability, property management, private property rights, blight and redevelopment, property taxes, and housing supply across Louisiana.
From the Louisiana Department of Insurance: During a press conference today with Governor Jeff Landry, Insurance Commissioner Tim Temple announced that registration for the next round of the Louisiana Fortify Homes Program (LFHP) will open at 8 a.m. on Monday, June 1, and will include 3,000 grants. The registration period for this lottery will be open for three weeks, closing at 5 p.m. on Friday, June 19. During the press conference, Gov. Landry signed HB 1187 by Rep. Paul Sawyer, which will allow Louisiana Citizens Property Insurance Corporation to transfer $50 million in additional Katrina bond assessment funds to the LFHP. Combined with the $30 million in funding the program will receive through taxes and fees on insurance entities, the LFHP will receive a total of $80 million this year. “By lowering overall losses, we can reduce insurance and reinsurance costs, draw more insurers into the market, motivate existing companies to write additional policies and lower insurance premiums,” said Commissioner Temple. “That is exactly what the Louisiana Fortify Homes Program is designed to do.” The list of coastal parishes that are eligible to participate is expanding to include Acadia, Jefferson Davis and Lafayette parishes. Additionally, homeowners who live in the portions of Ascension, Calcasieu, Iberia, Livingston, St. Martin, St. Tammany, Tangipahoa and Vermilion parishes that were previously not included in the program will now be eligible to participate. A map showing the full list of eligible parishes is available on FortifyHomes.La.Gov . “Louisiana is the fastest growing state in the country for Fortified roofs, and that growth is not by accident—it is the result of strong support from Governor Landry and legislators like Chairman Talbot, Chairman Firment and Representative Sawyer, targeted program design, and a clear recognition that strengthening homes is one of the most effective ways to reduce insurance losses,” said Commissioner Temple. “At the end of the day, this program is about more than just roofs. It is about protecting families, it is about strengthening communities, and it is about putting Louisiana in a stronger position—both physically and economically—to face the challenges ahead.” To participate in the lottery, homeowners must register during the June registration period. Homeowners who registered for a previous round but were not selected must register again to participate. People who register on the last day of the registration period have the same chance of being selected as those who register on the first day, so there is no need to rush to register as soon as the period opens. When registering, homeowners will need to upload their homestead exemption, insurance policy declarations page that includes wind coverage, and flood insurance declarations page if the residence is in a flood zone. Homeowners who need assistance obtaining a copy of their homestead exemption should contact their parish tax assessor. Homeowners can contact their homeowners and flood insurance companies or agents for a copy of their policy declarations page. Homeowners are required to create a profile in the LFHP system before registering for the lottery and may do so by visiting the LFHP website and clicking the Login button. Homeowners who previously created a profile may use the same one for this and future rounds. Once the lottery registration period closes, the LFHP will randomly select 3,000 participants and send email notifications to registrants about whether they were selected to participate. These selection notices will be sent via email beginning on Monday, June 22. There are several program requirements that homeowners should be aware of before registering. Those interested in the program are encouraged to review eligibility information and frequently asked questions at FortifyHomes.La.Gov to determine whether their home meets the requirements for the program. If selected to participate in the grant program, homeowners will be financially responsible for having the home evaluated by a FORTIFIED-certified Evaluator as well as costs for the roof upgrade including permits, inspections and construction costs beyond the amount of the grant The LFHP provides grants of up to $10,000 for homeowners to upgrade their roofs to standards set by the Insurance Institute for Business & Home Safety. The program helps Louisiana homeowners strengthen their roofs to better withstand hurricane-force winds.
Learn how to lower your debt-to-income ratio before buying a home in Louisiana and why working with an experienced real estate agent can help.
