Final Overtime Rule Announced
On May 18, 2016, the Final Rule setting forth changes to the white collar exemptions under the Fair Labor Standards Act (FLSA) was announced, including these provisions, which will be effective on December 1, 2016:
- The standard salary level has been increased to $47,476 annually, or $913 per week.
- The annual compensation requirement for highly compensated employees has been increased to $134,004.
Salary Level is Only One Criterion
There are no changes to the duties test, as some had feared. However, it is important to know that as with the old rule, salary level is only the first test. If an employee’s base salary is in excess of the minimum threshold, the employee must still meet one of several exemptions outlined in the regulations, including the Administrative, Professional, Executive and Computer exemptions. And, the burden remains on the employer to prove the employee falls within one of the exemptions.
The Final Rule incorporates an automatic update every three years to the minimum salary threshold, and allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to meet up to 10% of the new standard salary level.