Major Overhaul of Overtime Wages

May 19, 2016 | News

By Brian S. Duffy

December 1, 2016, is the effective date of the U.S. Department of Labor’s (DOL) rule addressing overtime standards.  Some industries will be substantially impacted by the final rule. To prepare for this change and to ensure compliance with viable solutions, all employers should audit, plan and budget well in advance of December.

Employers in Southern states, on average, will be affected more dramatically. This is because the new standard salary level for executive, administrative and professional (“EAP”) employees, being nearly doubled from $23,660 to $47,476 annually, is pegged at the 40th percentile of the lowest-wage census region, which is currently the South.

The total annual compensation requirement for highly compensated employees (HCE), subject to a minimal duties test, will be increased from $100,000 to $134,004, based on the annual equivalent of the 90th percentile of full-time salaried workers nationally.

And it doesn’t end there, as the rule builds in automatic updates to the salary level thresholds every three years, with the first to kick in on New Year’s Day 2020.

The Administration estimates that the new rule will extend the right to overtime pay to 4.2 million workers who are currently exempt.

For more information and to see the DOL’s announcement with substantial resources, click here.

And remember the hard deadline is December 1, 2016.

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