The final overtime regulations on exempt employees were issued by the Department of Labor last week, raising the salary test from $23,660 annually to $47,476. It is estimated this will result in an additional 4.2 million more employees qualifying for overtime.
The new salary threshold has sparked controversy and claims by both labor and management suggesting the sky was falling. Others have predicted the true impact has yet to be determined. No one seems to dispute the changes were long overdue. The previous salary test has not changed in over 10 years. The good news is they built in an automatic update to occur every three years based on wage growth in the lowest-income census region, which is currently in the south.
The DOL has provided guidance for non-profits, public sector, and private sector employers to assist in applying the new salary test. In general the DOL suggested options for addressing the new regulation including: 1) limit exempt employee hours to 40 hours per week, 2) pay the employees time and one half for work over 40 hours, or 3) raise the employee’s salary to exceed the new salary threshold..
All employers should review the salaries of their exempt employees and determine the impact of the new DOL regulations now, so they can be ready for implementation December 1, 2016.