Under the new regulations the salary threshold for overtime exemption will increase to $913 a week ($47,476 annually). This update more than doubles the threshold that was previously in place. The DOL estimates that more than 4 million employees that were exempt from overtime pay will now be eligible. Notably, the Final Rule also includes a mechanism to automatically update the salary threshold every three years and also gives employers the ability to use nondiscretionary bonuses and incentive payments to fulfill up to 10 percent of the threshold.
What does this mean to you? Many employers will need to reevaluate their current pay structures and may need to begin tracking the number of hours their salaried employees work. In order to comply with this change, employers will have three primary options for nonexempt employees (those eligible for overtime pay): pay employees time and a half for every hour they work over 40 hours, reduce their weekly hours to 40, or increase their salaried pay to the threshold of $47,476. Some industries that may be impacted significantly include restaurant, retail, and manufacturing.
The new regulations will be effective December 1, 2016. Companies will have until then to make determinations on which employees to reclassify as nonexempt and implement the changes. JPS recommends you consult an attorney to discuss the application of this rule and related employment law matters.
For more specifics and detail please refer to the U.S. DOL website: https://www.dol.gov/whd/overtime/final2016/