ALERT - Long-Awaited Changes To Overtime Rules Are Here

Volume 15, Issue 8
May 18, 2016

On May 17, 2016, the White House announced that the Department of Labor (DOL) is ready to publish long-awaited updates to the federal overtime regulations. These are the regulations that allow employers to exempt from overtime certain executive, administrative, professional, outside sales, and computer employees. To be considered exempt under these "white-collar" exemptions, employees must meet certain minimum requirements related to their primary job duties and, in most instances, must be paid on a salary basis at not less than the minimum amounts specified in the regulations.

The DOL has published the following changes to the regulations:

  1. The minimum salary necessary to qualify a white-collar employee for an exemption from overtime has increased from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).
  2. The minimum salary necessary to qualify a highly compensated employee for an overtime exemption has increased from $100,000 to $134,004 per year.
  3. The salary thresholds will automatically update every three (3) years.
  4. The duties tests for white-collar employees have not changed.
  5. For the first time, the DOL will allow up to 10 percent of the salary threshold for non-highly compensated employees to be met by non-discretionary bonuses, incentive pay, or commissions, provided these payments are made on at least a quarterly basis.

These new rules become effective December 1, 2016, which gives employers approximately six (6) months to make any necessary changes and ensure they are in compliance. We encourage you to review your current exempt positions and invite you to contact us so we can advise you as to any needed action prior to the effective date. As always, please feel free to contact a KZA attorney if you have any questions about this important new development.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.