The final overtime rule goes into effect on December 1, 2016. All employers should be aware of the specifics of the new rule and preparations for these changes should be well underway. We continue to field questions on this topic and turned to our firm’s Senior Administrative Manager, Sherry Keller to share more specifics on this very important topic. Here is what Sherry has to say:
What is overtime?
Unless specifically exempted, employees covered by the FLSA must receive pay for hours worked in excess of 40 hours in a workweek at a rate not less than one and one-half their regular rate of pay.
What determines if an employee falls within one of the white collar exemptions?
1. 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.
2. Be paid more than a specified salary level , which is $913 per week (equivalent of $47,476 annually)
3. Primarily perform executive, administrative or professional duties (as defined in the Department’s “duties test”)
What are the significant changes to the overtime regulations for white collared salaried workers?
For the first time, employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level, provided these payments are made on a quarterly or more frequent basis
How will employers implement the updated salary level requirement established in the final rule?
Employer have a range of options for responding to the updated standard salary level. For each affected employee newly entitled to overtime pay, employers may:
- Increase salary of an employee who meets the duties test to at least the new salary level to retain his or her exempt status;
- Pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked (over 40 hours within one work week)
- Reduce or eliminate overtime hours
- Reduce the amount of any pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime hours worked over 40 in the workweek, to hold total weekly pay constant
- Or use a combination of these responses.
Please contact Holbrook & Manter today with any questions you may have. It would be our pleasure to help you prepare ahead of the new rule taking effect. You can also find more information on the U.S. Department of labor website by clicking here: https://www.dol.gov/featured/overtime
Sherry Keller, H&M Senior Administrative Manager