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Overtime Expands to Millions

May 23, 2016


 

Last year, we sent an alert about the U.S. Department of Labor's proposed regulations on the Fair Labor Standards Act's "white collar" exemptions. Well...they're here. The final rule was announced last week and, as expected, it more than doubles the salary threshold for most exempt workers to $47,476 per year beginning December 1, 2016.

 

The result:

 

Millions of employees will now be eligible for overtime pay who weren’t previously.

 

Key provisions of the final rule:

 
  1. It increases the salary threshold for executive, administrative and professional ("white collar") exempt employees from the standard $455/week ($23,660 per year) to $913 per week ($47,476 per year)
  2. It increases the salary threshold for the highly compensated employee (HCE) exemption from $100,000 per year to $134,000 per year; and,
  3. It establishes a mechanism to automatically update the salary and compensation levels every three years to maintain the levels at the above percentiles. The first automatic update will occur January 1, 2020.

Note: The rule allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level for white collar employees. This is an addition to the regulations, as employers were not previously permitted to do this.

 

What does this mean for your organization?

 

There's no time like the present! Your organization should review and audit all exempt positions now, to ensure compliance with the existing regulations and the new salary threshold prior to the December 1st deadline.

 

Kubicki Draper’s full-service labor and employment department counsels employers on a wide range of employment practice issues, and is available to assist your organization with wage and hour and other employee-related matters which may arise.

 

If you have any questions or wish to discuss how these new proposed regulations may affect your organization, please feel free to contact Christin M. Russell, Esq. at 561-615-4327 or mail to: cmr@kubickidraper.com.

 

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