Preparing for the new overtime rules – November 2016 update
We are now only weeks away before the new overtime rules that go into effect on December 1, 2016. If you haven’t started preparing for the changes yet, here are the main items to get started:
- Review which of their employees are classified as exempt from overtime.
- Check if any of these employees are being paid a salary less than the new salary minimum of $47,476.
- Determine if changes in job duties, compensation, or classifications will be necessary.
Keep in mind that employees can still be classified as exempt from overtime…but you must ensure the requirements of the duties tests are met. We have recently reviewed the executive, administrative, professional , computer-related occupations, and outside sales exemption duties tests in our blog. One overtime exemption that is often overlooked by employers that we have not reviewed yet is the Highly-compensated workers exemption.
Highly-compensated workers are those who are paid a total annual compensation of $134,004 or more. To meet the highly-compensated worker exemption, they must meet these requirements:
- They earn a total annual compensation of $134,004 or more, which includes at least $913 per week paid on a salary basis;
- Their primary duties include performing office or non-manual work;
- They customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.
The job must meet ALL of these requirements…not just some. The US Department of Labor is very aggressive at enforcing this…and assesses significant penalties, especially if an employer willfully misclassifies employees as exempt from overtime.
For complete details on this exemption and to learn more about other exemptions, visit the Wage and Hour division of the US Department of Labor.