23 May Obama Administration Releases New Rules on Overtime Pay for Salaried Employees
On May 23, 2016 the Department of Labor published a final rule on salaried employees’ overtime compensation that has the potential to impact your business. This rule will entitle salaried workers making $47,476 per year or less to overtime pay.
The salary threshold is currently $23,660 and will be increased to $47,476 per year. The new level will be automatically updated every three years by the Department of Labor. The existing duties test will be left in place which determines whether white collar salaried workers earning more than the salary threshold are ineligible for overtime pay. For workers with salaries above the updated salary level, employers will continue to use the same duties test to determine whether or not the worker is entitled to overtime pay. Employers will be able to count bonuses and commissions toward as much as 10 percent of the salary threshold, provided payments are made on at least a quarterly basis.
The final rule has an effective date of December 1, 2016 which was set purposefully to avoid going into the next Administration. There will be Congressional efforts to block the rule from taking effect. Now that the rule is out, we will talk with Congressional offices and outside groups to discuss potential legislative strategies and will update you.