As you have likely already heard by now, the United States Department of Labor has published its long-awaited final rule greatly expanding the overtime protections of the Fair Labor Standards Act (“FLSA”). The new rule became effective December 1, 2016.
Three Things You Need to Know About the New Changes:
- Many of your current exempt employees will probably be entitled to overtime under the new rules. Under the old rules, employees earning a salary of at least $455 a week/$23,660 annually, may have been considered exempt from overtime under the white collar exemptions to the FLSA. Under the new rule effective December 1, exempt white collar employees will have to earn more than double that amount – $913 a week/$47,476 annually to fall within this exemption. This change is likely to have the biggest impact on the majority of businesses.
- “Highly Compensated Employees” must now earn $134,000.00 a year – up from $100,000.00 a year under the old rules. Under the old rules, an employee who earned a salary of at least $455 a week and total compensation of at least $100,000 annually, was exempt from overtime requirements. Under the new rules effective December 1, an employee will have to earn at least $134,000 a year in order to be an exempt “highly compensated” employee under the FLSA.
- The exemption threshold amounts stated above are going to go up automatically every three years starting January 20, 2020.
Bottom Line: These changes are going to cost employers big money and you should prepare for the impact. In the coming months, review and audit your workforce to determine whether to reclassify employees as non-exempt. Consider increasing salaries in order to maintain exemptions given the new salary threshold.
We can help you get ready for these new changes. If you need help, contact Megan Noble or Joe Chancey.
A fact sheet from the Department of Labor regarding the details of the changes can be found here: