Update On Regulations Defining And Delimiting The Overtime Exemptions For Executive, Administrative And Professional Employees

Blog, Employment Attorneys

Posted in on June 9, 2016

On May 18, 2016 the Department of Labor announced that it will publish a Final Rule updating the exemption of executive, administrative and professional employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act.  The Final Rule updates the salary level required for exemptions to ensure that the Fair Labor Standards Act intended overtime protections are fully implemented and to make the exemption for executives, administrative and professional employees easier to understand and apply.

The focus of the Final Rule is primarily updating the salary and compensation levels needed for executive, administrative and professional employees to be exempt.  Specifically, in part, the Final Rule:

1. Sets the standard salary level at $913 per week or $47,476 annually for a full-year worker;
2. Sets the total annual compensation requirement for highly compensated employees subject to the “minimum duties test” to $134,004;
3. Establish a mechanism for automatically updating the salary and compensation levels every three years (this will begin January 1, 2020); and
4. Amends the “salary basis test” to allow employers to use nondiscretionary bonus and incentive payments to satisfy up to 10% of the new standard salary level.

The Final Rule goes into effect on December 1, 2016.  If you are a business trying to determine how the Final Rule affects how you operate your business, contact one of the Employment Lawyers at Baker, Braverman & Barbadoro, P.C. to ensure that your business is prepared to be compliant with the Final Rule. – Susan M. Molinari.