June 2, 2016
As most everyone has heard, the Department of Labor finally released the updated Overtime regulations of the Fair Labor Standards Act that will take effect later this year. The changes to the salary level threshold for employees to be classified as Exempt are long overdue, but it seems the DOL is trying to make up for lost time by more than doubling the salary level threshold at one time.
The primary change the DOL made was to increase the salary level threshold to $47,476, which is set at the 40th percentile for wages across the United States. It is important to remember that this minimum salary for an employee to be exempt from the overtime requirements is only one of the three burdens or tests (and represents one of the easiest and cleanest tests of the three) that an employee must meet. Additionally, employers will now be allowed to include up to 10% of the salary threshold amount in non-discretionary bonus money provided certain conditions are met.
Any employee that does not meet the three requirements from exemption must be paid overtime pay at the rate of one and a half times his or her normal base rate for any hours worked in excess of 40 in the employer’s designated pay week. In order to be considered exempt from this overtime premium requirement, the employee must meet all three of the following tests:
(On a related note, for the past five years EctoHR has maintained a non-discretionary incentive plan based on Companywide profitability targets and has found it to be a great motivator for employees. For more information on this plan, please contact us.)
EctoHR is currently in the process of reviewing the Exempt vs. Non-Exempt status for employees of its clients and is pleased to report that this change impacts a fairly small number of employees across all of our clients. For our ongoing HR outsourcing and HR consulting clients, we will be proactively reaching out to each client to conduct a review of any employee that is in question.
If your company has not seen or used EctoHR’s FLSA exemption worksheet or needs additional information and advice on how to treat your employees under the new FLSA regulations put out by the Department of Labor, please contact EctoHR at hr@ectohr.com or 810.534.0170.
As most everyone has heard, the Department of Labor finally released the updated Overtime regulations of the Fair Labor Standards Act that will take effect later this year. The changes to the salary level threshold for employees to be classified as Exempt are long overdue, but it seems the DOL is trying to make up for lost time by more than doubling the salary level threshold at one time.
The primary change the DOL made was to increase the salary level threshold to $47,476, which is set at the 40th percentile for wages across the United States. It is important to remember that this minimum salary for an employee to be exempt from the overtime requirements is only one of the three burdens or tests (and represents one of the easiest and cleanest tests of the three) that an employee must meet. Additionally, employers will now be allowed to include up to 10% of the salary threshold amount in non-discretionary bonus money provided certain conditions are met.
Any employee that does not meet the three requirements from exemption must be paid overtime pay at the rate of one and a half times his or her normal base rate for any hours worked in excess of 40 in the employer’s designated pay week. In order to be considered exempt from this overtime premium requirement, the employee must meet all three of the following tests:
(On a related note, for the past five years EctoHR has maintained a non-discretionary incentive plan based on Companywide profitability targets and has found it to be a great motivator for employees. For more information on this plan, please contact us.)
EctoHR is currently in the process of reviewing the Exempt vs. Non-Exempt status for employees of its clients and is pleased to report that this change impacts a fairly small number of employees across all of our clients. For our ongoing HR outsourcing and HR consulting clients, we will be proactively reaching out to each client to conduct a review of any employee that is in question.
If your company has not seen or used EctoHR’s FLSA exemption worksheet or needs additional information and advice on how to treat your employees under the new FLSA regulations put out by the Department of Labor, please contact EctoHR at hr@ectohr.com or 810.534.0170.