The U.S. Department of Labor, effective December 1, 2016, has issued new regulations pertaining to overtime pay protections pursuant to the Fair Labor Standards Act (“FLSA”). Essentially the rule states that some management, administrative and professional employees shall become eligible for overtime pay when they work more than forty (40) hours per week.
Under the new rules, employers must pay overtime (time and half) for work performed by qualified employees working beyond forty (40) hours a week and earning up to $47,476 annually. In order to further understand the rule and its implications, it is important to understand what kind of employees specifically qualify and those who are exempt from the new overtime regulations. Employers must therefore conduct a thorough audit of their existing employees to closely examine those employees exempt from the overtime regulations.
Three criteria must be examined in order to determine whether a particular employee is exempt from overtime pay. The employer must also keep; in mind that all three criteria must be met with in order to qualify for the exemption:
III. Employee’s primary job duty must involve the kind of work associated with exempt executive, administrative, or professional employees as follows:
The final rules also establish a mechanism for automatically updating the salary and compensation level for “highly compensated employees” subject to a more minimal duties test, from its previous amount of $100,000 to $134,000.
The Computer Employee Exemption remains unchanged. To qualify for the computer employee exemption, the employee must be paid at least $913/week ($47,476/year) or at least $27.63/hour and the following duties must be satisfied:
Considering employers have a limited time to comply with the new rules, it is advisable that they start ensuring compliance with the new rules well within the deadline. This would include thinking about whether they want to provide pay raises, spreading employment by reducing work hours for employees working over 40 hours per week, or just paying the required overtime payment.