Be advised that the Department of Labor has released a proposed overtime rule for any salary exempt employees with a $35,308 salary threshold. Under the current rule, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. The proposed rule does not address the duties test for white-collar exemptions or the salary basis requirement.
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The Department of Labor’s Final Rule on white collar exemptions takes effect on December 1, 2016. Are you ready? You can answer this question with three simple tests. An employee must pass all three tests to be eligible for exemption from overtime pay. 1. The Salary Basis Test First, the exempt employee must be paid on a salary basis rather than an hourly basis. The salary must not be subject to reduction based on quality or quantity of work. 2. The Salary Level Test Second, the employee’s salary must meet the minimum salary lever. Currently, the minimum salary level is $455 per week, which is $23,660 per year. On December 1, that minimum salary level will increase to $913 per week, which is $47,476 per year.
Last year, the Department of Labor published a Notice of Proposed Rulemaking signaling a drastic impending change to the salary threshold requirement for employers to classify certain jobs as exempt from overtime and minimum wage. Since that time, we have been working with clients on workforce analysis and planning, including budget forecasting, to determine the best and most cost-efficient way to adapt to the changes to come.
On March 23, 2016, the Department of Labor issues its new “persuader” rule which has been the matter of much controversy since 2011. The persuader rule is designed to implement Section 203(b) of the Labor Management Reporting and Disclosure Act of 1959. A prior rule existed, but the Obama Department of Labor thought that it did not go far enough (translation: did not favor organized labor sufficiently - writer’s opinion).
As we previously reported, the minimum salary amount for an exempt employee since 2004 was $455/week or $23,660/annually. On July 6, 2015, the DOL announced its proposed rule which, in part, would mandate that employers have to pay an exempt employee a minimum salary of $970.00/week, or $50,440/annually.