Today, the Department of Labor final rule Defining and
Delimiting the Exemptions for Executive, Administrative, Professional, Outside
Sales and Computer Employees was published. Below is a brief summary of the
rule prepared by ReedSmith.
The final rule includes:
·
Increases the weekly salary threshold for exempt
executive, administrative, and professional employees to $47,476 per year (or
$913/week), less than last summer’s proposal. This means that salaried
employees earning less than this amount, regardless of job duties, must be
compensated for overtime work.
·
Automatically updates the salary level for the
“white collar” exemptions every three years, beginning on January 1, 2020. Each
update will index the salary level for exempt employees to the 40th percentile
of weekly earnings for full-time salaried workers in the lowest-wage Census
region. At present, the DOL expects that the 2020 update will raise the
salary threshold to $51,168/year ($984/week). Beginning August 1, 2019,
the DOL will post the new salary levels 150 days in advance of their effective
date.
·
Allows up to 10% of the salary threshold for
exempt executives, administrators, and professionals to be satisfied by
non-discretionary bonuses, incentive pay, or commissions, provided that such
payments are made on at least a quarterly basis.
·
Increases the annual compensation level for the
“highly-compensated employee” exemption, an amalgam of the “white collar”
exemptions, from $100,000 to $134,004 (of that, at least $913/week must be paid
on a salary basis). This will be updated every three years, also beginning on
January 1, 2020, by indexing such compensation to the 90th percentile of income
for full-time salaried workers nationally. The DOL currently expects the salary
threshold for this exemption to rise to $147,524/year in 2020.
·
Does not modify the duties tests associated with
the “white collar” exemptions.
The full text of the final rule can be found
here. The new regulations take effect on
December 1, 2016.
AHCA/NCAL is working with our legal consultant Jackson
Lewis and will be providing more details on the rule in the near future.