New Overtime Rule Will Affect All Employers

Compliance

On May 18, 2016, the Department of Labor (DOL) published the Final Rule concerning new overtime regulations.

Although the Final Rule was recently published, the new overtime regulations do not go into effect until December 1, 2016.

The biggest changes that may affect you include:

  • Salary Threshold Increase: The salary threshold was increased from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). This means that beginning on 12/01/2016, any worker earning less than $47,476 annually can no longer be paid on a salary basis and must be paid overtime.
  • Highly Compensated Employee (HCE) Threshold: The HCE threshold was increased from $100,000 per year to $134,004 per year. Any HCE that performs executive, administrative, and professional (EAP) duties is exempt from overtime. Under the old rule, HCE employees that do not spend the majority of their time performing EAP duties were exempt from overtime if they earned more than $100,000 or more annually. Under the new rule, those employees must earn $134,000 or more annually to be exempt from overtime.
  • Automatic Adjustments Every 3 Years: The Salary Threshold and HCE threshold will automatically adjust every 3 years.
  • Nondiscretionary bonuses and incentive payment can be included, but only up to 10% of the required salary amount.

Read more about the Overtime Final Rule: https://www.dol.gov/whd/overtime/final2016/.

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