DOL Issues Final Rule Updating the FLSA Overtime Regulations
Michael W. Kulakowski, Esq. |
Two years in the making, and after a lot of back-and-forth information about when (or even if) it would happen, it finally happened – this morning President Obama and Secretary of Labor Perez announced publication of the U.S. DOL’s Final Rule updating the FLSA’s overtime regulations. While this is bad news for many employers, there is also a little good news: the Final Rule is slightly more employer-friendly than the Proposed Rule we became so familiar with over the past year. There will be plenty more guidance to come, but for now, here are the key points:
- The Final Rule increases the minimum salary requirements for determining exemption from the FLSA overtime requirements under the Executive, Administrative, and Professional exemption tests.
- The minimum salary threshold is increased from $455 per week to $913 per week, or to $47,476 per year (good news: the Proposed Rule included an increase to $50,044 per year).
- Employers will be permitted to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of this minimum salary requirement (good news: this was not included in the Proposed Rule).
- There are no changes to any of the “duties” tests (very good news: The DOL indicated that the Final Rule might include changes to the duties tests).
- The Final Rule establishes a mechanism for automatically updating the minimum salary threshold every three years (good news: The Proposed Rule call for a yearly upward adjustment).
- The minimum salary threshold requirement for the “highly compensated employee” exemption is increased from $100,000 per year, to $134,004 per year. NOTE: Because Pennsylvania does not recognize this federal law exemption, Pennsylvania employers need to understand that this exemption does not, and will not, apply to employees working in the Commonwealth.
- Final Rule does not take effect until December 1, 2016 (whereas the DOL had previously explained that employers would be provided 60 days to implement the necessary changes).
The other good news is that MEA is far ahead of the curve in its preparation to assist employers, not only to implement these changes, but also to formulate strategies and options for smooth and efficient transitions which minimize impact on employee moral, and on the company’s pocket book. To help lay the ground work for helping our Members implement these changes, we will be holding a webinar on this topic on May 24 at 11:00 AM. We will not only cover the substance of the new Rule, but also provide some tips and strategies for helping companies formulate an implementation plan, including various options.
Finally, our long-time and trusted partner Mike Trachtman (and his law firm Powell Trachtman) also quickly jumped on this and put together a Workplace Advisor Article which provides invaluable guidance and some deeper analysis on this topic. This article will be provided as part of our regularly-scheduled Workplace Advisor email this Friday.
As always, we are available on hotline, and be on the lookout for more to come on this topic over the next few weeks and months.
Michael W. Kulakowski, Esquire
Employment Counsel and Director, Compliance Services
MidAtlantic Employers’ Association
*This MEA Member Alert is provided for general informational purposes only and does not constitute legal advice.