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The Department of Labor (DOL) has finally released its final rule on overtime regulations. Here’s what you need to know:

  • The standard salary level was increased from $455 per week ($23,660 annually) to $913 per week ($47,476 annually)
  • The total compensation level for “highly compensated employees” was increased from $100,000 to $134,004
  • As anticipated, the salary levels are set to be revisited (aka, increased) every three years, beginning January 1, 2020
  • The salary basis test was amended to allow nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new standard salary level ($47,476 annually). Previously, discretionary bonuses and incentive payments were not be included.

While final rule’s standard salary level ($47,476) is lower than was anticipated ($50,000 proposed), it is obviously still a dramatic increase from the previous $455 per week requirement.

The regulations are effective December 1, 2016, so now is the time to get your house in order.

Here’s what you need to do:

  • If you haven’t done so already, all positions and compensation levels need to be audited to determine whether salaries that would otherwise fall beneath the new standard level will be increased to at least $913 per week, or if another compensation system (such as changing a previously salaried individual to hourly compensation) should be utilized
  • If you will be making additional positions hourly, be sure that your timekeeping system is ready to handle them and that you are familiarizing those positions with your timekeeping systems and policies
  • Create a system now of implementing future changes to the standard salary level. The level will likely be changing (increasing) every three years, beginning January 1, 2020
  • Be sure to include your employment law attorney/firm in this process to ensure that compensation and timekeeping systems and policies are being implemented correctly. Getting it right on the front end is imperative to avoiding headaches down the road.

For questions or more information, be sure to contact us.

We will be providing more in-depth information regarding these changes and the DOL’s overtime exemptions at a forthcoming seminar. Be sure to stay tuned to our site for more information.

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