New Overtime Exemption Rules-UPDATED

UPDATE: Following a court hearing held November 23rd, the United States District Court issued a nationwide injunction prohibiting the enforcement of these rules. Therefore there will be no change taking place December 1.

ORIGINAL ARTICLE: Last week the White House and Department of Labor released the details of the new overtime exemption rules, which are to take effect December 1, 2016.

The aspect of the new rules that will affect white collar workers is the increase in the minimum salary for employees exempt from overtime. Currently, the minimum salary for exempt employees is $23,660. The new rules more than double this amount to $47,476. In order to be an exempt employee, three requirements must be met: they must perform exempt duties, be paid the minimum salary, and be paid on salary (not hourly) basis.

What does this mean for employers?

Employers will need to review their payroll to see if they have any employees currently on a salary less than $47,476 per year that may work overtime hours during any one week. If you do, then you have a few options to stay in compliance with the labor rules. You can choose to raise their salary to the new minimum, to switch these employees to an hourly rate, or to keep them on their current salary and pay the overtime rate in addition to their salary in the event that they work overtime. A salary below the minimum amount is legal, however, the employee must be compensated for overtime.

A change was also made to the minimum salary for highly compensated employees, increasing that amount from $100,000 to $134,004. The minimum salary for both exempt and high compensated exempt employees is set to be adjusted every three years beginning January 1, 2020.

For more details on the new rules, visit the website below:

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