Department of Labor Issues New Overtime Regulations

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Millions of additional employees may become eligible for overtime pay under the Fair Labor Standards Act (“FLSA”) due to new Department of Labor regulations set to take effect Dec. 1, 2016.

The FLSA sets minimum wage and overtime protections. All non-exempt employees must receive pay at a rate at least one and one-half their regular salary rate for hours worked in excess 40 per week. Employees may be exempt if they are “white-collar” employees under the FLSA. “White-collar” employees are those employed in a bona fide administrative, executive, or professional capacity.

According to the regulations, the new minimum salary for the “white-collar” exemption will increase to $913 a week, the equivalent of $47,476 annually. This is an almost 50% increase from the previous minimum salary of $23,660.

An employee falls within one of the white-collar exemptions if they are paid a predetermined and fixed salary, paid more than $913 per week, and primarily perform executive, administrative, or professional duties. The salary basis or salary level requirements do not apply to certain professions (for example, doctors, teachers, and attorneys). The new regulations also provide for an exemption for certain highly-compensated employees earning $134,004 per year with at least $913 per week paid on a salary basis.

Unlike previous regulations, the new rule says 10% of the minimum weekly salary for “white-collar” employees may come from non-discretionary bonuses, incentive payments, and commissions, paid at least quarterly.

Set with a daunting task, employers have just six (6) months to determine whether their employees will be exempt or non-exempt and how to most efficiently apply these regulations. 

If you have any questions about how this may impact your business, need assistance in preparing for the changes, or want more information on wage and hour laws in general, please contact us at 479-621-0006.

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