The Department of Labor has just announced its final overtime rule.  It was thought that the salary threshold for maintaining the overtime exemption for white collar (executive, administrative, and professional) employees (the “salary test”) would increase from $455 per week/$23,660 per year to $970 per week/$50,440 per year.  There was also an expectation that once the Final Rule was published, employers would have just 90 days to come into compliance.

The Final Rule sets a slightly lower than expected salary level and also gives employers longer to prepare for the changes, establishing a December 1, 2016 effective date. 

Under the Final Rule, the required salary for an exempt white collar employee who is subject to the “salary test” will be $913 per week or $47,476 annually.  This salary level will be automatically updated every 3 years, beginning January 1, 2020.

No changes were made to the second part of the exemption test known as the “duties test” but now is a good time to review your exempt positions to insure that employees who meet the new “salary test” are continuing to meet the required “duties test” for their position.

Action steps:  You should determine how many of your currently exempt employees are paid below $913 per week/$47,476 per year.  Once those employees are identified, plans should be made to do one of the following:  increase their salary on or before December 1, 2016 to meet the new threshold, change their classification to nonexempt (overtime eligible) and manage overtime hours and pay accordingly, or determine whether they meet any other exemption.

The Department of Labor website contains a number of useful resources for employers.  That information can be found at  https://www.dol.gov/WHD/overtime/final2016/.

If you have any questions about this recent rule issued by the Department of Labor or the potential effect on your currently exempt employees, contact attorney Maureen Heffernan at 252-0020 or email Maureen at:  [email protected].