X
410-546-0552

Final Rule: Overtime Regulations

KIM & ASSOCIATES PA·TUESDAY, JUNE 7, 2016

On May 18, 2016, President Obama announced the Department of Labor’s final rule updating the overtime regulations. The final rule will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.

Key Provisions of the Final Rule: 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. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  1. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  1. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Source: www.dol.gov

Kim & Associates, PA
(410) 546-0552
info@kgcpa.com

Comments are closed.

Close

Your browser is out-of-date!

Update your browser to view this website correctly.

Get More Information