Earlier this year the Department of Labor announced an update to the overtime rule of the Fair Labor Standards Act (FLSA). This new rule and challenges to it have been covered extensively in the media recently, and we know many of you are wondering whether the new regulations will go into effect this year, as previously announced.
The answer is yes. Please plan for the new overtime rule to take effect as scheduled on December 1, 2016.
In September, the U.S. House of Representatives passed a bill to delay the implementation of the new regulations by six months; however, the Senate will not vote on the bill until later this year, and it is not expected to pass. Other challenges have been filed in court, but these challenges will not have an impact on the start date either.
For more information about the new rule, please review this fact sheet from the Department of Labor and the key provisions listed below.
Key Provisions of the Final Rule
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
The Anthros team will continue working with you to review the classifications of your employees and to ensure you are in compliance with the new requirements.
If you have additional questions about how this new rule affects your business and how you can prepare for and address it, do not hesitate to contact us.
About the Author
Helen Usher is the Director of Benefits at Anthros Inc.