Legal Alert Status of Increased Salary Requirement for Overtime Exemptions

Authored By THEODORE T. STORER

What will Change

Last year we told you that the Department of Labor was going to increase the salary requirement for employees who are exempt from overtime. The final rule was issued on May 18, 2016. The new rules set the minimum salary at $913 per week which will take effect on December 1, 2016.

What does this mean?

Many employers think that just because they pay an employee a salary, they do not have to pay the employee overtime.  Simply paying an employee a salary is not enough unless the duties of a salaried employee fall within a specific exemption and the employee is paid at least the minimum salary required.  The rules issued by the DOL more than double the prior weekly salary requirement.  The new benchmark is $913 per week ($47,476 per year).

Who will be impacted?

The new salary requirements will impact the executive, administrative, computer and professional exemptions.  Other exempt positions are not subject to the increased salary requirement, including outside sales employees and teachers.

How many will be impacted?

Estimates show that more than 100,000 Hoosier workers may be impacted, as provided here:

//www.indystar.com/story/news/politics/2015/07/02/new-ot-rule-affect-indiana-workers/29646383/

 When will the change take place?

The proposed rule will become effective on December 1, 2016, giving employers more than six months to prepare.  Employers who do not comply could be subject to immediate claims, lawsuits for overtime pay or DOL Wage and Hour investigations.

Action Item:

If you have not already, Employers should understand their options.  Employers can increase the salary to meet the new standards.  Employers can be prepared to pay overtime to those whose salaries fall below the required floor, and be prepared to track the hours worked.  Employers may adjust compensation levels to prepare for the increased costs of overtime.  Your attorneys at Rothberg can assist you in understanding your options and modifying your policies.


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