Department of Labor Overtime Exemptions


Today, the Department of Labor (DOL) released the final rule updating the overtime regulations which will automatically extend overtime pay protections to over four million workers within the first year of implementation.
The final ruling raises the salary and compensation level needed for Executive, Administrative and Professional workers to be exempt.  Starting December 1, 2016 an employee will need to make at least $47,476 annually/$913.00 per week to be considered exempt.  This amount can include nondiscretionary bonuses and commissions up to 10% of the new standard salary level.  This is an increase from the current rate of $455/week ($800 or more in CA dependent on your area's minimum wage).
Every three years there will be an automatic update to the standard salary level of $913 per week.  This will be based on the 40 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region.
The final ruling does not change the duties test to distinguish between overtime-eligible workers and those that may be exempt but remember, the employee needs to first pass the salary basis test.
What does this mean for your business?
If you have employees who are classified as "exempt" and below $913.00 salary per week on December 1, 2016, they will no longer be considered "exempt" but "non-exempt" and subject to FLSA regulations (overtime pay, and in some states, meals, rest periods and other rules).  These employees will need to be paid on an hourly basis and are subject to your states overtime rules.
Over the next few months VertiSource HR will be contacting you to discuss what employees within your business will be affected and how we can assist you in managing this change.
If you have any questions or concerns, please reply to this email or you may contact us at 801-566-3084.

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