By: Amy C. Felder
Wilkins Patterson, P.A.
On May 18, 2016, the Department of Labor (DOL) issued its highly anticipated final rule updating the Fair Labor Standards Act (FLSA) overtime regulations regarding the executive, administrative and professional exemptions (often referred to as the “White Collar” exemptions). Employers have until December 1, 2016, to comply with the rule. Notably, the final rule does not alter the duties test for meeting these exemptions, and does not make any changes to the outside sales and computer professional exemptions. It further does not eliminate the “concurrent duties” test for determining whether the performance of both exempt and nonexempt duties disqualifies an employee from exempt status.
Here are some important things the rule does:
- Increases the threshold salary for the White Collar exemptions to $913 per week, or $47,476 annually. This is less than the initially proposed annual salary of $50,440, but still more than double the former threshold of $23,660;
- Includes an automatic update to the threshold salary every three (3) years to an amount equal to the 40th percentile of full-time salaried workers in the lowest income Census region, which currently happens to be the South;
- Amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent of the new salary level; and
- Increases the threshold salary for the highly compensated employee (HCE) from $100,000 annually to $135,004 annually. The HCE threshold will also automatically update every three years to equal the 90th percentile of full-time salaried workers nationwide.
Additional information regarding the practical and economic implications of the final rule for employers will be forthcoming over the next few weeks. Employers should contact a labor and employment attorney if they have any questions regarding the final rule in the meantime.