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Final Overtime Rule Announced by the White House
What does the change in the Overtime Threshold mean for your Company?
In November of 2015, proposed revisions to the Fair Labor Standards Act (FLSA) through an initiative titled "A Fair Day's Pay for a Fair Day's Work (http://www.mccloskeypartners.com/
The rule announced on Wednesday, May 18 (https://www.dol.gov/
What employers need to know about the new overtime rule
For employers governed by Fair Labor Standards Act (FLSA), it is important to understand the new overtime rule and exemption language for white collar workers.
Straightforward changes created by the final overtime rule include the following:
· Effective date of December 1, 2016: The final overtime rule goes into full effect on December 1, 2016.
· Increase in threshold salary level for full time, salaried workers: The new rule increases the threshold for overtime pay for salaried, full-time workers from $23,600/annual ($11.35/hourly)
· Increase in the salary threshold level for HCEs: Adjusted to represent the 90th percentile of full-time, salaried workers, the new HCE bar is $134,004. This represents an increase from the previous threshold of $100,000 per year.
· Maintains adjustments to compensation and salary levels: The new rule creates a mechanism for automatic compensation level adjustments to ensure alignment with current economic indicators. These updates will occur every three years, with the first adjustments posted on August 1, 2019, and effective on January 1, 2020.
The overtime rule is aimed at workers who currently do not earn overtime for more than 40 hours worked per week, and earn below a certain salary figure. While job titles are used by some employers to confer exempt status, it is important to remember exemptions follow duties (https://www.dol.gov/
Salaried workers, regardless of job title, may be eligible for overtime based on their salary arrangement. Tests established earlier for professional, administrative, and executive (EAP) exemptions remain the same. That said, the new rule does not apply to teachers, lawyers, or doctors.
For many employers, challenges lie ahead in making adjustments to salary, job assignments, and overtime practices to become compliant by December 1, 2016.
Steps to move toward compliance with the new overtime rule
Announcement of the final overtime rule has been expected for some time. With the final figures, employers now have the opportunity to rigorously review overtime and other policies and make needed changes.
If salary or overtime changes are required, the DOL suggests several options for employers to respond to the new rule, including:
· Increase salaries of exempt employees: If you currently have exempt employees close to the new salary threshold, who routinely work overtime, consider raising their salary to retain their exempt status.
If you have employees that as of 12/1/2016 are classified as exempt that make less than $47,476, these employees will need to be reviewed and possibly reclassified as non-exempt/hourly to be in FLSA compliance.
· Reconsider work assignments:
These options are just some of the methods to implement the final overtime rule. When you have questions about final rule, or duties tests, we offer responsive, proactive service and answers to help your business maintain compliance and workforce engagement. Contact us (http://www.mccloskeypartners.com/
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McCloskey Partners, LLC