On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations.
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
1. Raises the salary threshold indicating eligibility from $455/week($23,660 per year) to $913/week ($47,476 per year)
2. Sets the total annual compensation requirement for highly compensated employees (HCE) at $134,004 (currently at $100,000)
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years beginning January 1, 2020
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The final rule will become effective on December 1, 2016, giving employers six months to assess and comply. The final rule does not make any changes to the duties test for executive, administrative and professional employees.
For more detailed guidance on the rule, visit these links:
- Guidance for employers in the private sector
- Guidance for employers in the nonprofit sector
- Guidance for employers in higher education
Nothing in the Fair Labor Standards Act – or in the overtime rule – requires the choice between flexible work arrangements or opportunities for career advancement and complying with basic labor standards. There is no requirement that a worker must have a predetermined schedule, and nothing prohibits working whenever, wherever or however the worker and the employer agree.
The FLSA requires that employers keep certain records to ensure that workers get paid the wages they earn and are owed, it’s up to the employer to choose the method that works best for them and the needs of their workforce. There’s no requirement that employees “punch in” and “punch out.” Employers have flexibility in designing systems to make sure appropriate records are kept to track the number of hours worked each day.
You might also want to read:
- Who Benefits from the New Overtime Rule
- Nonprofits and the Proposed Overtime Rule
- Everything You Need to Know About Updating Overtime Pay