Employment Law Alert – May 2016
DOL SALARY THRESHOLD CHANGES TO BE ADDRESSED AT UPCOMING 32ND ANNUAL EMPLOYMENT LAW UPDATE
There has been a substantial amount of press attention devoted to the May 18, 2016 announcement by the Wage-Hour Division of the U.S. Department of Labor, raising the dollar-amount salary thresholds required for the “white collar exemptions” to the federal overtime requirements – the exemptions for administrative, professional, and executive personnel. We have been following the proposed rule since President Obama directed the DOL to take action back in 2014.
What does the new Rule do?
The Rule is effective December 1, 2016, and implements two critical changes to the “white collar” exemptions from overtime. First, the minimum weekly salary required to be paid to an employee to qualify for an administrative, professional, or executive exemption has been raised to $913 per week, which works out to $47,476 for a full year. Workers who are paid less than $913 per week will not be eligible for the professional, administrative, or executive exemptions from overtime, no matter what their duties are. To claim an administrative, professional or executive exemption, the worker must also meet the applicable duties test. Second, the minimum compensation required to qualify as a highly compensated employee has been increased from $100,000 to $132,004 annually. A highly-compensated employee is an exempt executive, administrative or professional employee so long as the worker meets a shorter, more minimalist “duties test.” The Rule further provides that both of these new salary levels automatically will be updated every three years, beginning in 2020. You can find more information on this important change on the DOL’s website here.
What should you do now?
For those companies that need to address currently-exempt white-collar employees making less than $47,476 per year, December 1 is close. It is important to consider the impact of increasing salary levels versus reclassifying employees as non-exempt to comply with the changes before their effective date. This is also a good time to review whether any employee treated as exempt meets all of the duties requirements of any exemption relied upon.
At Kaufman & Canoles, we are dedicated to keeping our clients informed of important legal changes like these. Join us at our 32nd Annual Employment Law Update on July 21, 2016, at the Hampton Roads Convention Center where these changes will be addressed and compliance options will be highlighted in our session on Conducting an Effective Self-Audit. To register or for more information, click here. In addition, members of our Labor & Employment Team are readily available to assist you with any immediate needs you might have regarding employment law.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2020.