DOL Issues New Overtime Rules

U.S. Department of Labor has announced sweeping changes to overtime regulations yesterday.  These new rules include the following key changes that you should be aware of:

  • Salary Level – Increases from $455 weekly ($23,660 annually) to $913 weekly ($47,476 annually).
  • “Highly Compensated Employee” Compensation Level – Increases from $100,000 annually to $134,004 annually.
  • Automatic Adjusting – Salary Level and Highly Compensated Employee Compensation Level will automatically adjust every 3 years.  Salary Level will be tied the 40th percentile of full-time salaried workers in the lowest-wage Census region.  Highly Compensated Employee Compensation Level will be tied to 90th percentile of full-time salaried workers nationally.  There was no automatic adjusting under the old rules.
  • Bonuses – Up to 10% of standard salary level can come from non-discretionary bonuses, incentive payments, and commissions, paid at least quarterly.  Such compensation was not counted under the old rules.

These changes will affect all employees that have been classified as exempt on the basis of the standard duties test (executive employees, administrative employees, learned professional employees, creative professional employees, and computer professionals) or the highly compensated employees test, but are compensated below the new thresholds.  Employers will be faced with difficult choices in deciding how to address these changes in the context of their businesses.

The new rules will go into effect on December 1, 2016, but the time to begin planning for implementation is now.  Please feel free to email or call me if you have any questions or need assistance in helping your company implement these new rules.

By: Michael Miles, Esquire
Partner at Brown & Connery, LLP