U.S. Department of Labor Announces Increased Salary Requirement for Overtime Exemptions

 

Last year we informed you of the United States Department of Labor (“DOL”) proposal to amend the white-collar overtime exemption to increase the salary threshold necessary to be considered exempt from the FLSA overtime laws. On May 23, 2016, the DOL announced the long-awaited revision to its regulations, which more than doubles the minimum salary requirement to qualify for the overtime exemption. This change will have significant implications for employers across the country.

According to statistics published by the DOL, the amended regulations will require employers to pay overtime to as many as 4 million additional employees unless their salary is increased to the new minimum threshold. The new regulations take effect December 1, 2016, and raise the requirement for exempt status from $23,660 ($455 per week) to $47,476 ($913 per week).

It is important to remember that the salary requirement under the FLSA will be adjusted for inflation every three years, so this is not a one-time increase. That said, the so-called “duties test” (meaning the primary duties the employee performs must fall into the administrative, professional or executive classification) was not changed under the amended regulations.

Now would be an excellent time for your company to schedule online wage and hour training for your managers. Given the large number of employees who now may be subject to overtime compensation (or a healthy raise), it is important to review all of the wage and hour laws that are the subject of significant litigation throughout the country.

The DOL changes also present special problems for California employers, as the federal salary threshold is actually higher than that currently required under state law (twice the minimum wage). This means that a significant number of employees in California will need salary review to see if they still qualify for overtime exemptions. Further, California’s recently enacted staggered minimum wage increases will place the California salary threshold higher than the federal standard by 2019, causing continued confusion for employers.

Syntrio is committed to helping businesses avoid costly incidents associated with wage and hour litigation. Syntrio’s cost-effective wage and hour training courses are designed with the decision-making management employee in mind. Therefore, the examples used within are real-life scenarios that are easy to comprehend, even when the user does not have a technical background in wage and hour law. 

Contact www.syntrio.com for more information about our wage and hour courses for employees and management and remember to follow us on Twitter, Google Plus and LinkedIn for daily updates on compliance that impact your company.

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