New Overtime Regulations – Effective December 1, 2016

May 18, 2016 – Jim Spencer

After months of anticipation and dread from employers, the U.S. Department of Labor has announced the content of its updated regulations governing the exemption of executive, administrative, and professional (“EAP”) employees from minimum wage and overtime requirements under the Fair Labor Standards Act (“FLSA”).

The new rules go into effect on December 1, 2016.  Employers should act now to prepare for the changes.

The key provisions of the new rule are:

1. The salary level for EAP employees will increase from $455/week to $913/week (i.e., $47,476/year).
2. Non-discretionary bonuses, incentive payments, and commissions can be used to satisfy up to 10% of the new salary level, but only if they are paid at least quarterly.
3. The total annual compensation requirement for highly compensated employees will increase from $100,000/year to $134,004/year.
4. These levels will automatically increase every 3 years. The next increase will take effective on January 1, 2020.

Thankfully, no changes were made to the EAP duties tests.

The new regulations are scheduled for publication in the Federal Register on May 23, 2016. Until then, they can be read here.

For more information about the new regulations or to discuss compliance strategies, contact attorneys Eric W. Barth, James C. Spencer, Mitchell L. Herren, David M. Rapp, or Christopher L. Arellano at 316.267.2000.