Earlier this month, the U.S. Department of Labor published The Final Rule, which updated overtime regulations. Effective on December 1, 2016, it will protect over 4 million workers, guaranteeing overtime pay to anyone who works over 40 hours per week and makes less than $47,476 annually.
The Final Rule revised the salary and compensation levels needed for executive, administrative, and professional workers to be exempt from overtime compensation. The Final Rule set the standard salary rule at the 40th percentile of earnings of full-time salaried workers, raising it from $23,660 to $47,476 annually. It also raised the highly compensated employee salary threshold from $100,000 to $134,004 annually. Highly compensated employees are still subject to a minimal duties test to demonstrate that the employee is not eligible for overtime. In addition, The Final Rule amended the salary basis test to allow employers to use non-discretionary bonuses and incentive payments, including commissions, to satisfy up to 10% of the new standard salary, as long such payments are paid at least quarterly. Furthermore, The Final Rule established a mechanism for automatically updating salary and compensation levels every three years. The first update will be due on January 1, 2020.
Please do not hesitate to contact us if you have any questions about how this development may affect you or your business.