Overtime Rules Effective 12/1/2016 Finalized

The Department of Labor (“DOL”) has announced an increase to the minimum salary requirement for administrative, professional, executive and highly compensated employee exemptions. The new minimum salary for exemption will increase from $455/wk to $913/wk, effective December 1, 2016.

The federal wage and hour law, the Fair Labor Standards Act of 1938, 29 U.S.C. 201, et seq., requires covered employers to pay their employees a minimum wage, currently $7.25 per hour, and overtime at time and a half for hours worked over 40 in a workweek. As with most, there are exceptions to every rule. In regards to this rule the exceptions are called exemptions. The most prominent of exemptions is the overtime exemption for executive, administrative, and professional employees, and outside sales employees.

To be considered exempt, employees must pass specific salary and duties tests.

· Meet the minimum salary requirement

· The employer must pay the employee their full salary in any week they work (there are limited exceptions to this test)

· The employee’s work duties must meet certain criteria

There is also an upper level test for “highly compensated” employees (“HCE”). At this salary level, the duties tests standards for exemption are more relaxed. As of December 1 this figure will increase to $134,004 per year or $2,577 per week.

How To Prepare For The Increases?

· Consider increasing the salary of already exempt employees to the minimum of$913/wk.

· Re-class currently exempt employees to non-exempt and begin paying overtime.

· Continue paying on a salary basis, but keep records of their hours worked; paying overtime when worked.