In an earlier-than-expected announcement, the Obama administration today announced the U.S. Department of Labor’s issuance of its Final Rule updating the overtime regulations regarding salary requirements for employees that employers characterize as exempt under the “white collar” exemptions.
Employers who characterize employees as exempt under the Executive, Administrative or Professional exemptions are now faced with a salary minimum for those employees of $913 per week, or $47,476 per year, effective December 1, 2016, more than double the current salary requirements.
The Final Rule focuses specifically on updating the salary and compensation levels the DOL believed were needed for the Executive, Administrative and Professional employees to remain exempt from the overtime provisions of the Fair Labor Standards Act (the “Act”). Specifically, the Final Rule does the following:
- Sets the standard salary level for a white collar exempt employee to be $913 per week or $47,476 annually (up from $455 per week, or $23, 660 annually);
- Sets the total annual compensation requirement for highly compensated employees at $134,004 annually (up from $100,000 annually; and
- Establishes a mechanism for automatically updating the salary and compensation levels every three years.
Employers need to begin to identify those employees who currently are classified as exempt from overtime based on the white collar exemptions and are paid a salary of under $47,476 to determine how they will comply with the new regulations.
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