We recently received an email update from our colleague Tony Wilson, a Principal with NFP, informing us about the release of the DOL’s final overtime regulations that will take effect on December 1, 2016. If you have any questions about how the information provided by Tony below may affect your business, reach out to Amy Williams and let us know how we can help.
The Department of Labor (DOL) has released the final regulations making changes to Part 541 governing overtime exemptions under the Fair Labor Standards Act (FLSA).
The rule goes into effect December 1, 2016. Please note it will take our in-house legal team some time to go through the final regulations. We also are working with Chad Shultz and his team at Gordon & Rees on this topic. We will update you as quickly as possible on our review. Also, we will be scheduling webinars as soon as we have reviewed the final regulations and determined exactly how those will impact employers.
The Society for Human Resource Management (SHRM) released the following 5 points concerning the final regulations and the key elements of the new regulations that you need to know now:
1) Salary Threshold Changed to $913/week ($47,476 per Year) This threshold doubles the current salary threshold level. While this level is slightly lower than the threshold in the proposed rule, it still encompasses many employees that are currently classified as exempt.
2) Automatic Salary Threshold Increases Every 3 Years (Not Annually) to Maintain Level at 40th Percentile in Lowest-Wage Census Region DOL reduced the frequency of the automatic increases in response to concerns raised by SHRM and others. Instead of annual increases, the threshold will be adjusted every 3 years to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage Census region.
3) Duties Test is Unchanged The absence of a duties test change is a significant win for the thousands of SHRM members who expressed concern in this area. DOL did not make changes to the standard duties test.
4) Effective Date is December 1, 2016 SHRM advocated for a longer implementation period than the standard 60 days and the final rule provides additional time for employers to prepare. With the rule going into effect on December 1, 2016, employers will want to review their current workforce to determine which employees are affected, whether to re-classify those employees, and execute a communications strategy. Employers should keep in mind the periodic adjustments and set a regular review process.
5) Highly Compensated Employee (HCE) Exemption Is Now $134,004 Per Year The final rule retains the methodology in the proposed rule setting the threshold at the 90th percentile of full-time salaried workers nationally.