DOL final rule regarding overtime released Email
Thursday, May 19, 2016 02:00 AM

DOL final rule on overtime for white collar workersOn May 23, the US Department of Labor (DOL) will post on the Federal Register a final rule regarding overtime for white collar workers.

The final rule was amended slightly from the rule changes proposed last fall. The standard salary threshold is lower (meeting the 40th percentile of earnings in the lowest-wage Census Region rather than nationally), while the threshold for highly compensated employees was raised. Instead of annual updates to the salary thresholds, the levels will be updated every three years. Nondiscretionary bonuses and incentive payments can be included for up to 10% of the salary level.

Compliance with the rule is required by December 1, 2016. In the coming weeks and months, ALCC will present resources via Colorado Green NOW and to help members prepare. There are plans to present a webinar to review the rule and help you plan for compliance.

Before then, it’s important for employers to evaluate their staff, take stock of what exempt employees are earning, and decide what changes need to be made. Will you choose to continue current salaries and pay overtime? Or will you bring employees up to the new salary level?

Another key factor in compliance will be communication. It is critical that management and employees understand the changes and be aware of how to track and manage overtime. Employers must stress the importance of proper time tracking and reporting.

From US DOL:

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.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

Read the final rule.

Subscribe to ALCC LAB - Add a feed to your browser so you can keep up with posts on this blog.