Wednesday, May 18, 2016

New Overtime Rule is Here!!!!!

It's here. Last night, the Department of Labor released its eagerly anticipated final rule regarding overtime compensation and the white collar exemptions. It takes effect on December 1, 2016. So, without further adieu, what does it do?
  • Exempt employees must be paid on a salary basis that is at least $913/week ($47,476 annually). This is slightly lower than the proposed rule of about $970 per week; but, still ridiculously higher than the current requirement of $455 per week.
Not official use.
  • The minimum salary will update automatically every three years, starting on January 1, 2020 (which is a pain but still an improvement over the proposed rule, which would have updated every year). It is based on the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). 
  • The total compensation to qualify as a highly compensated employee (HCE) (which requires passing only the minimum duties test - a lower bar than that required for lower-paid employees), is now $134,004. That number is based on the 90th percentile of full-time salaried workers nationally, and will likewise update every three years. The current requirement is $100,000. 
  • Employers may also "count" nondiscretionary bonuses and incentive payments/commissions to satisfy up to 10% of the minimum salary level.
What does it not do? Per this handy fact sheet from DOL:  

"The Final Rule is not changing any of the existing job duty requirements to qualify for exemption."

And the people rejoiced... before going back to complaining about the changes above. DOL posted a number of resources that employers and employees may find helpful here.

This is just my quick take. I plan to have a white paper out soon, after I've had a chance to better digest the entirety of the rule.