Wednesday, May 18, 2016

DOL Publishes Final Overtime Rule

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. 

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