Final DOL Overtime Rule Will Impact Your Business - Effective Dec. 1, 2016

  • Posted by: J. Kent Gervasini |
  • 6/3/16 |
  • 8:05 PM
  • 1961 Views
Final DOL Overtime Rule Will Impact Your Business - Effective Dec. 1, 2016

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act

In our May 3, 2016 blog, 1 in 5 Business Owners Unaware of DOL's Proposed Overtime Rule, we talked about the expectation that the U. S. Department of Labor (DOL) will finalize its new rule over the coming months.  However, all 508 pages of the final rule (29 CFR Part 541), were published in the Federal Register on May 23, 2016, much sooner than expected.  

The Obama administration announced on May 18, 2016, the publication of the U.S. Department of Labor’s final overtime rule under the Fair Labor Standards Act will become effective December 1, 2016.  The DOL's final rule, updating the overtime regulations will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. Here is a quick summary of the new overtime rule, and at the bottom of the blog, eight government links that may surely keep you up at night:

  • Raise the standard salary level for exempt employees from $455 per week to $913 per week, and from $23,660 to $47,476 annually
  • Allow up to 10% of the standard salary level to come from nondiscretionary bonuses, incentive payments, and commissions, paid quarterly or more frequently
  • Raise the total annual compensation requirement for highly compensated employees (HCEs) from $100,000 to $134,004
  • Update the requisite salary levels every three years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest-wage census region, and the HCE total annual compensation level at the 90th percentile of full-time salaried workers nationally
  • Not change the so-called white collar exemptions' duties tests

A chart comparing relevant provisions of the current, proposed, and final rule is set forth below. Also below are relevant links to obtain more information.

Description

Curent Regulations

Notice of Proposed
Rulemaking

Final Rule

Salary
Level

  • $455 weekly
  • $970 weekly (if finalized as proposed) - 40th percentile of full-time salaried workers nationally
  • $913 weekly - 40th percentile of full-time salaried workers in the lowest-wage census region (currently the South)

HCE Total Annual Compensation 
Level

  • $100,000
    annually
  • $122,148 - 90th percentile of full-time salaried workers nationally
  • $134,004 - 90th percentile of full-time salaried workers nationally

Automatic
Adjusting

  • None
  • Annually, with requests for comment on a CPI or percentile basis
  • Every three years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest-wage census region, and the HCE total annual compensation level at the 90th percentile of full-time salaried workers nationally

Bonuses

  • No provision to count nondiscretionary bnuses and commissions toward the standard salary level
  • Request for comment on counting nondiscretionary bonuses and commissions toward standard salary level
  • Up to 10% of standard salary level can come from nondiscretionary bonuses, incentive payments, and commissions, paid at least quarterly

Standard
Duties Test

  • See WHD Fact Sheet #17 for a description of EAP duties
  • No specific changes proposed to the standard duties test.  Request for comments on whether the duties tests are working as intended
  • No changes to the standard duties test.


Relevant links

The information above does not constitute legal advice.  Employers and staffing agencies should consult a Colorado labor or employment attorney with additional questions, or for guidance and more information.


Source:  Stephen C. Dwyer, General Counsel, American Staffing Association, United States Department of Labor, Wage and Hour Division

 

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