Department of Labor Announces New Overtime Rules

Written by Colligan Law on . Posted in Articles, News

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By Joseph F. Saeli, Jr.

The U. S. Department of Labor recently announced new rules for determining whether employees are exempt employees. If an employee is not exempt, they must be paid one and one half times their normal hourly rate for all hours worked above forty in a week.

The key parts of the new rules are:

  • Exempt employees must be paid an annual salary of at least $47,476. (The current requirement in New York State for exempt executive and administrative employees is $35,100).
  • The new minimum salary for Highly Compensated Employees is $134,004.
  • Employers may use non-discretionary bonuses and incentive payments to satisfy up to 10% of the salary level.  (This was not previously permitted).
  • The salary levels will be automatically updated every three years.
  • There is no change in the job duties tests for the exempt categories.
  • The new rules are effective December 1, 2016.

In addition to meeting these salary tests, exempt employees must also meet the job duties tests for one of the three exempt categories, professional, executive or administrative. Also, they must be salaried. An hourly employee can never be exempt.

If you have employees who are currently exempt, but do not meet the new salary requirements, you are are faced with a difficult decision. The options some employers are considering include the following:

  • Change the employee’s status to hourly, and pay overtime for all hours over forty in a week.
  • Change the employee’s status to non-exempt salaried, and pay overtime for all hours over forty in a week. (This is possible, but the hourly rate calculation for determining overtime pay can be complicated.)
  • Increase the employee’s salary to meet the new requirements.

Please let me know if I can assist you in complying with these new rules.

This article is meant to convey general information, and not to provide any legal advice.  Legal advice should be provided only by an attorney who is familiar with all the circumstances about which advice is requested.