DOL overtime regulations to take effect December 1
Posted On: 5-18-2016 | Posted By: Beth Fitzgerald, Human Resources Generalist
Beginning December 1, 2016, the minimum annual salary threshold for exempt employees will more than double, from $23,660 to $47,476, after the U.S. Department of Labor issued revised regulations. Employers should be prepared to comply with the new regulations by the December 1 effective date by reviewing pay practices and employee classifications.
The U.S. Department of Labor released the much-anticipated final overtime rules on May 18, after a year-long proposal and review process. Under the regulations, the minimum salary for employees exempt from receiving overtime pay (time plus one half) under the white collar exemptions will be $913 per week, which equates to $47,476 annually. Employees paid less than the threshold will be entitled to overtime pay for any work beyond 40 hours per week.
The new regulations also increased the total annual compensation needed to exempt highly compensated employees, raising it to $134,004 annually. Additionally, the final rule amends the salary-basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commission) to satisfy up to 10 percent of the new standard salary level.
Although the DOL sought additional information in its proposed regulation to determine if a duties test was necessary, there were no changes to the existing duties tests in the final rule.
One concession from the DOL in the final rule was a change in the salary threshold update. Instead of the originally proposed annual update, the salary threshold will now be updated every three years, beginning in January 2020.
You can read more about the new rules and the actions employers should take via a DOL publication, General Guidance for Private Employers on Changes to the White Collar Exemptions in the Overtime Final Rule.