As you may have heard, the Department of Labor recently released a final ruling regarding “white collar” exemptions under the Fair Labor Standards Act for executive, administrative, and professional employees.
In the Final Rule, the Department updated the salary level above which certain “white collar” workers may be exempt from overtime pay requirements. This change raises the salary level from its previous amount of $455 per week (the equivalent of $23,660 per year) to a new level of $913 per week (the equivalent of $47,476 per year). Salaried white collar employees paid below the updated salary level are generally entitled to overtime pay, while employees paid at or above the salary level may be exempt from overtime pay if they primarily perform certain duties.
The Final Rule also raises the compensation level for highly compensated employees subject to a more minimal duties test from its previous amount of $100,000 to $134,004 annually. These changes take effect on December 1, 2016.
The Final Rule also establishes a mechanism for automatically updating the salary and compensation levels every three years, with the first update to take place in 2020. The Final Rule does not include any changes to the duties tests, which also affect the determination of who is exempt from overtime.
Please review the salaries and total compensation of all your salaried exempt employees. Also be aware that bonus, incentives, and commissions typically can only count 10% towards meeting the new salary threshold.
Please feel free to contact The Delp Group for any specific questions.