Allison Moreman, an associate in Jackson Kelly’s Litigation and Commercial Law Practice Groups with expertise in employment law, and Brian Simmons, a human resources advisor with CMI Consulting, are hosting an educational session entitled “New Overtime Exemption Rules: What Does It Mean For You?” on Friday, September 23 from 9:00 – 10:30 a.m. (Registration & breakfast at 8:30 a.m.) at Commerce Lexington Inc.’s first floor conference room. There is no cost to attend this session. RSVP to [email protected].
The final rule makes the following changes to the overtime exemption qualifications:
- Increases the standard salary threshold for overtime eligibility for full-time workers from $455 to $913 per week ($47,476 per year). This is the 40th percentile of weekly earnings for full-time workers in the lowest-wage Census Region.
- Allows employers to use nondiscretionary bonuses and incentive payments, including commissions, paid at least quarterly to satisfy up to 10% of the new minimum salary level.
- Increases the total annual compensation requirement needed to exempt highly compensated employees ("HCE") from overtime eligibility to $134,004/annually (increased from $100,000). This amount is the 90th percentile of earnings of full-time salaried workers. The employee must also be paid their annual compensation at least $913 weekly and pass a minimal duties test.
- Includes a mechanism to automatically update the standard salary level requirement every three years to ensure that the salary level test remains realistic. The standard salary level will be updated to maintain a threshold equal to the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. The DOL will publish all updated rates in the Federal Register at least 150 days before their effective date and post them on the Wage and Hour Division's website.
- Be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the "salary basis" test);
- Primarily perform executive, administrative, or professional duties, as provided in the DOL’s regulations (the “duties test”).
- In addition, the new rules did not change the exemptions for outside sales, teachers, lawyers or doctors.
Although the final rule will not take effect until December 1, 2016, it is important to begin planning for compliance now.
Congressional efforts, such as the Protecting Workplace Advancement and Opportunity Act (S.2707/H.R. 4773), to stop or modify the rule would likely not withstand President Obama’s veto.
If you have questions about the federal overtime rule, contact Andi Johnson, Commerce Lexington’s Chief Policy Officer, at (859) 226-1614.
CLICK HERE TO VIEW A PRESENTATION BY THE U.S. CHAMBER DETAILING THE DOL OVERTIME RULE CHANGES