New Overtime Rules Take Effect December 1, 2016
New Overtime Rules
After nearly two years of discussion and debate, the Department of Labor published its final rules that will significantly impact employees entitled to overtime pay. The new rules have wide reaching impact and will affect a large number of employers in ways that at first glance may not be obvious. We recommend that all employers review the status of their pay policies in light of these new rules, and consult with employment counsel where appropriate. The new rules take affect on December 1, 2016.
Highlights of the new rules:
- Salary level for exempt employees – salaried employees who earn less than $47,476 annually ($913 per week) must be paid overtime, regardless of their title or duties. Overtime pay means time and one half of their normal hourly pay rate for hours in excess of 40 in a work week.
- Employees earning more than $134,004 (highly compensated employees, or HCEs) are not required to be paid overtime, regardless of the nature of their title or duties. This is an increase from the prior threshold of $100,000.
- Employees earning between $47,476 and $134,004 annually must be paid overtime unless they meet the exemption for executive, administrative and professional positions, commonly referred to as the “white collar” exception. There are specific definitions for these types of positions. Those definitions remain unchanged from the current rules.
- Up to 10% of the thresholds described above can be met through non-discretionary bonuses, incentive pay or commissions. This is a new policy.
- The thresholds described above will be updated every three years, with the first update occurring in 2020.
Additional information can be found on the DOL website.