Effective December 1, 2016 there are changes to the minimum wage level for any employees who are classified as salaried employees exempt from overtime pay. Starting on December 1, employees that are classified as exempt from overtime pay will have to be paid a minimum of $913 per week or $47,476 annually for a full-year worker. This is up from the current levels of $455 per week or $23,660 annually.
To be eligible for the so called “White Collar Overtime Exemption” you must meet certain criteria and duties. This exemption only applies to executive, administrative, professional, outside sales and computer employees under the Fair Labor Standards Act. To learn more about these position and duty requirements visit the attached links below.
So if you have any employees who you are currently paying a fixed salary and they fall under the “White Collar Exemption”, then you need to determine if they are meeting the new minimum wage levels of $913 per week or $47,476 annually to be exempt from having to be paid overtime. If they do not currently meet these minimum wage levels, then you have several options to comply with the new requirements. You can raise their salary to the new levels, continue to pay the same salary and pay overtime for any hours worked over 40 per week, adjust schedule or workloads to ensure employee does not work over 40 hours per week or put the employee on an hourly wage and pay overtime for any hours worked over 40 per week.
There are provisions to include bonus or incentive payments, but they are not very helpful. First, you can satisfy only up to 10% of the standard salary level with these payments. Second, is these payments must be made on a minimum of a quarterly basis.
We have included links below to a number of documents that can provide you additional information on this new requirement. But, if you have questions, please give us a call.
US Department of Labor Fact Sheet:
https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.pdf
US Department of Labor Guidance for Private Employers:
https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf
US Department of Labor Small Entity Compliance Guide:
https://www.dol.gov/whd/overtime/final2016/SmallBusinessGuide.pdf
US Department of Labor Frequently Asked Questions for the New Rule:
https://www.dol.gov/WHD/overtime/final2016/faq.htm
US Department of Labor Regulations Part 778 Publication on Overtime Compensation:
