Preparing for the new overtime rules – October 2016 update
We are now another month closer to the new overtime rules that go into effect on December 1, 2016, since they were reported back on May 19, 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, and professional exemption duties tests in our blog. With only about a month left before the overtime rules are put in place, let’s review the last exemptions that we have not covered: Computer-related occupations exemption and outside sales exemption.
To meet the requirements of the computer-related occupations exemption job duties, ALL of the following tests must be met:
- The employee must be compensated on a salary or fee basis at a rate no less than $913 per week, or if compensated on an hourly basis, at a rate not less than $27.63 an hour.
- The employee must be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field performing duties consisting of:
- application of systems analysis techniques and procedures
- design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, or computer programs related to machine operating systems
To meet the requirements of the outside sales exemption job duties, ALL of the following tests must be met:
- The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $913 per week;
- The employee’s primary duty must be making sales [as defined by the Fair Labor Standards Act], or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer
- The employee must be customarily and regularly engaged away from the employer’s place or places of business
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.
Do you need assistance with this or other compensation consulting needs? Contact us and check out our blog for more helpful resources.