On May 18, 2016, President Obama and Department of Labor Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations. With the December 1, 2016 compliance deadline looming here are some things employers should know.
1. The minimum salary threshold required for an employee to be exempt from overtime was raised from $23,660 annually to $47,476 annually. 2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004).
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption. 4. The Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
Specific questions with regard to these new rules should be addressed with your HR teams as soon as possible. The Department of Labor has a number of archived webinars online as well as linked question and answer sessions for non-profit sector, state and local governments, higher education and general information on the overtime final rule.