The Department of Labor has issued a final rule which will have a dramatic effect on which employees are exempt from the Fair Labor Standards Act’s overtime pay requirements. These requirements, in general, provide that an employer must pay a non-exempt employee a minimum of one and one-half of his/her salary (computed on an hourly basis) for hours worked in excess of 40 in any given work week.
The existing regulations, modified by the new rule, had exempted so-called white collar employees: professional, executive and administrative, outside sales and computer employees (as defined by the regulations) who earned a minimum of $455 per week or $23,550 annually. Also exempt were highly compensated employees-employees who regularly performed some of the functions of professional, executive or administrative employees and were paid a minimum of $100,000 annually.
The new rule, while not changing the description of the exempt categories, increases the exemption threshold for white collar employees to $47,476 and the highly compensated employee to $134,004.
These salary thresholds will increase every three years based on statistics from the U.S. Bureau of Labor Statistics.
The effect of the rule is to eliminate the exempt status of white collar employees including professional, executive and administrative employees making $47,476 or less or highly compensated employees making $134,004 or less.
The effective date of the new rule is December 1, 2016.
Since the new rule greatly increases the number of non-exempt employees covered by the overtime regulations, employers should review the written job descriptions of their employees as well as the nature of the work their employees actually perform (often not the same as written descriptions). Employers should also review their salary and wage structure.
Antheil Maslow and MacMinn, LLP can assist employers in assuring compliance with the FLSA.