November 16, 2016

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By Wyche Attorney Camden Navarro Massingill

 

After much anticipation – and some wishful thinking that the day might never come – the effective date of the Department of Labor’s Final Overtime Rule, December 1, 2016, is rapidly nearing.

As a reminder, the new regulations increase the standard salary level for the exemption from overtime requirements from $455 per week ($23,660 a year) to $913 per week ($47,476 a year). What this means is that employees earning less than $47,476 per year – even if they are salaried – will be entitled to overtime pay as a matter of law.

One other change is friendlier to employers.  Under the new rule, nondiscretionary bonuses, incentive payments, and commissions may be counted to satisfy up to 10 percent of the salary level requirement, as long as these payments are made on a quarterly or more frequent basis.

Practically speaking, the first step for employers is to identify exempt employees and job positions that currently are paid less than $913 per week or $47,476 per year.  For employees currently classified as exempt but whose compensation will not satisfy the new minimum salary threshold, employers have two basic options: (1) they can reclassify these employees as nonexempt and pay them overtime; or (2) they can raise those employees’ salaries to meet the new thresholds.  If employers go with the first option and reclassify employees as nonexempt, employers must determine what these employees’ regular hourly rate of pay will be; there is room here to make choices that will save the employer money.

We trust that you are ready for this change.  But if not, and if you need any assistance bringing your business into compliance, the attorneys at Wyche are available to assist.