After months of speculation, today the Department of Labor announced its final overtime changes that will affect the Fair Labor Standards Act. Previously, it was believed that the new salary exemption threshold would be $50,440, but it has been lowered in the final rule. The changes are estimated to affect 4.2 million American workers, who will be newly eligible for overtime pay.
Here is a look at the changes finalized as a result of these new regulations:
- New salary level is $47,476, which equates to $913 per week (previous level was $455 per week).
- New salary level for highly compensated employees is $134,004.
- Increases will occur every 3 years, which will be based on wage growth.
- Employers will be permitted to use commissions and bonuses (up to 10%) to satisfy the new salary level.
- Employers will have until December 1, 2016 to comply.
- No changes to the duties test for executive, administrative and professional employees.
As employers consider reclassifying employees and potentially changing compensation or hours worked, their ability to communicate effectively with affected employees will have a major impact on their organization.
Download Paycor’s Essential Employer Conversation Guide to help manage challenging conversations with affected employees.
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