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Reminder: Fair Labor Standards Act

November 03, 2016 | Leave a Comment

Undoubtedly, you’ve heard about the upcoming changes to the Fair Labor Standards Act. The Department of Labor announced the monumental adjustments back in May, and employers have either spent the summer preparing or hoping it will all go away. Chances are, if you’re in the latter, you may be rushing to ensure that your company is complaint by the Dec. 1 deadline.

The key changes are as follows:

  • The minimum salary threshold for exempt employees has increased from $23,660 to $47,476 annually ($913 weekly). Employees falling below this amount will have to be paid overtime, even if they meet the duties requirements of the exemption tests.
  • This minimum salary threshold will potentially increase every three years. Based on current projections, by Jan. 1, 2020, we anticipate it will rise above $51,000.
  • The minimum threshold for Highly Compensated Exemptions raises from $100,000 to $134,004 annually.
  • Employers can now include incentives, bonuses and commissions as part of their figures when determining annual salary; however, these incentives, bonuses, and commissions, must be paid at least quarterly and can only contribute up to 10% of the overall compensation.

Employees who are exempt from overtime must meet three requirements:

  1. Be paid on a salaried basis.
  2. Meet the criteria of one or more of the duties requirements of the DOL Exemption Classification.
  3. Earn the minimum salary threshold.

Of these requirements, the only change on Dec. 1 is the change to the minimum salary threshold. All of the other requirements are still in place.

Recently, news sources reported that a bill which would delay this change was passed. There was a bill passed by the House which would delay the implementation of this bill by 6 months, allowing employers additional time to prepare. This bill however has not been passed by the Senate, and all sources indicate the President will veto. As a result, employers should proceed forward with preparing for these changes with a Dec. 1 effective date. In the event there are any changes to this rule, we will notify you as quickly as possible.

For additional information on this, we encourage you to view a recording of the webinar we hosted in May this year. Click here to view the webinar.

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