Wage and overtime laws are changing once again. In May 2016, the U.S. Department of Labor announced its Final Rule updating the overtime provisions of the Fair Labor Standards Act. The Final Rule takes effect December 1, 2016, and will update the minimum salary level every three years for the executive, administrative, and professional employees exemption. Key provisions of the Final Rule are:
- The minimum standard salary increased from $23,660 to $47,476 annually (from $455 to $913 per week), which is the current salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region – which is currently the South.
- The minimum annual compensation requirement for highly compensated employees increased from $100,000 to $134,004, which is the annual equivalent of the 90th percentile of full-time salaried workers nationally.
- The salary and compensation levels will be automatically updated every three years to maintain the levels at the above percentiles. The initial salary increases take effect on December 1, 2016, and the first update will occur on January 1, 2020.
- Employers may now use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. Payments must be paid on a quarterly or more frequent basis.
- The Final Rule makes no changes to the duties tests for highly compensated employees or employees under the executive, administrative or professional exemption.
All employers should review their handbooks and polices to ensure they are consistent with applicable law. Changes to the foregoing wage and overtime laws take effect December 1, 2016. If you have any questions or concerns regarding employee overtime or any other employment issues, please call us at Ledger Square Law.