The moment we have all been waiting for (dreading?) has arrived — the Department of Labor issued its “Overtime” Final Rule. The details are available on the DOL’s website, with the “official” Final Rule to be published in the Federal Regulations tomorrow.
As anyone who follows HR or employment law knows, this Final Rule has been highly anticipated — not to mention hotly debated — due to what is essentially a complete overhaul of the salary basis portion of executive, administrative, and professional overtime exemptions. We now know:
- The new minimum salary basis is $913/week or $47,476/annually.
- The highly compensated employee salary basis jumps to $134,004/annually.
- The salary basis will be “automatically” updated every three years, beginning January 1, 2020.
- Employers may now use nondiscretionary bonuses and incentive payments, including commissions, to satisfy up to 10 percent of the salary basis.
- Perhaps most importantly, the effective date of the Final Rule is December 1, 2016.
To me, what stands out the most is the effective date — it gives employers much more time to adopt the new regulations than most people anticipated (some suspected it would be as few as 30 days). So, that’s good news for the thousands of employers who will be impacted by these changes. Also notable? The DOL did not make any changes to the duties test for any of the exemptions.
Once we have a chance to fully digest the Final Rule, we will be back with additional updates. In the meantime, check out the DOL’s Questions and Answers section and Fact Sheet for additional information. You can also comment on this post or email me directly if you have questions. Stay tuned!