Tuesday, October 25, 2016

New Overtime Rules Take Effect December 1. 2016-Are You Prepared?

  • Salary Level: The new threshold salary level for determining exempt status is $913 per week or $47,476 annually (previously $455 per week).
  • Highly Compensated Employee (“HCE”): The new threshold annual compensation requirement for the HCE exemption is $134,004 (previously $100,000 annually).
  • Automatic Adjusting: The threshold salary level will change every three years based on the salary level at the 40th percentile of full-time salaried workers in the lowest-wage Census region or, for the HCE exemption, based on the total compensation level at the 90th percentile of full-time salaried workers nationally.
  • Bonuses: Up to 10% of a standard salary level can come from non-discretionary bonuses, incentive payments, and commissions, paid at least quarterly.
  • Standard Duties Test: There have been no changes to the duties test.
Any employers that have historically been covered by the Fair Labor Standards Act ("FLSA") will remain covered. Coverage under the FLSA is usually achieved in one of two ways: (1) the organization is a covered enterprise; or (2) a particular worker is individually covered. While many non-profit organizations may not be covered enterprises under the FLSA, most non-profits are likely to have some employees who are covered individually and are therefore entitled to the minimum wage and overtime protections guaranteed by the FLSA. An employee who engages in interstate commerce or in the production of goods for interstate commerce is covered by the FLSA. Employees whose work involves or relates to the movement of persons or things across state lines are also considered engaged in interstate commerce -- and using the telephone or computer for interstate communications may be enough to qualify. The rules are complex. It is suggested that employers to review the classification of all existing employees and perhaps reclassify them under the purview of this new rule. Nontheless, employers should be aware of the penalties that can attach to a misclassification of employees.