The long awaited changes to the Fair Labor Standards Act’s overtime exemption for Executive, Administrative, Professional, Outside Sales and Computer Employees (referred to as the White Collar Exemptions), were published on May 18, 2016.
Key changes include an increase to salary and compensation levels needed to meet the exemption. The new salary level, taking effect December 1, 2016 will be $913.00 per week ($47,476.00 annually for a full-year worker). The highly compensated employee exemption has been increased to $134,004.00. Under the Final Rule, the salary level will be automatically updated every three years. Lastly, the Salary Basis test will permit employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new standard salary level.
Employers are urged to review their current compensation plans and classification of employees. Employees who previously met the requirements for exemption may now be re-classified as “non-exempt” under the Final Rule, requiring employers to track hours worked for employees who previously were not required to track hours. Employers may now have to pay overtime to employees who never before were eligible for overtime pay.
For questions about your pay practices and proper classification of employees, contact Deena B. Rosendahl, Esq. via email or 201-947-8855 x 212.