Under the current Federal wage and hour law, the Fair Labor Standards Act (FLSA), non-exempt workers are required to be paid overtime pay - 1.5 times their regular rate - for all hours worked in excess of forty (40) in a week There are exemptions to this requirement. The most common exemptions are the "white collar" exemptions because they primarily apply to executives, administrative, and professional employees.
In order to be an exempt white collar worker, the employee must satisfy three requirements:
(1) they must perform duties that are specific to each exemption (for example, the executive exemption),
(2) they must be paid on a salary basis, meaning that they receive their full salary in any week in which they work, with very few exceptions,
(3) their salary must be at least the minimum level ($913 per week / $47,476 per year).
The New Regulations:
This is the last requirement to be changed by the new regulations. Prior to the change, the minimum amount since 2004 was $455 per week/$23,660 per year. The new regulations increase this new minimum to $913 per week/$47,476 per year. This annual amount will also be adjusted every three years.
Most salaried workers whose salary was between these levels should expect a change in their compensation system, especially if they work over 40 hours per week. In order for an employer to be in compliance by the December 1st deadline they may:
1) Reclassify such workers to a non-exempt hourly status,
2) Increase their salary to maintain exempt status; or
3) Make other changes in order to be in compliance.
Under the new regulations, up to 10% of the salary amount can come from non-discretionary bonus, incentive payments, and commissions, as long as those payments are made at least quarterly.
Workers currently paid on an hourly basis are not impacted by the new regulations. The new regulations go into effect December 1, 2016. They are expected to automatically adjust every three years, based on federal statistics about wages for salaried workers, so that the new minimum stays at the 40th percentile of the lowest national region. HR Advantage has already received many calls and emails regarding the new overtime changes and are here to answer any of your questions. Helpful link to SHRM on action to be taken Click Here