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ALL EMPLOYERS SHOULD READ THIS UPDATE – NEW FLSA REGULATIONS ANNOUNCED

Over the last several months, we sent two Employment Law Bulletins warning that significant changes are on the way to FLSA regulations related to the minimum salary and compensation levels for exempt Executive, Administrative and Professional workers.  Today, the DOL announced the Final Rule modifying these regulations.

Below are some important changes:

  • The minimum salary requirement for most exempt employees (often referred to as the Salary Basis Requirement) will be $913 per week or $47,476 per year (up from $455 per week / $23,660 per year);
  • Employers may use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the Salary Basis Requirement;
  • The annual compensation requirement for employees who are exempt under the highly compensated employees (HCE) rules will be $134,004 (up from $100,000);
  • The above minimum compensation levels will be automatically updated every three years based on pre-established formulas (First update will be January 1, 2020); and
  • The above changes become effective on December 1, 2016.

If you have an exempt employee earning less than $47,476 per year, important decisions must be made before December 1.  In particular, employers need to determine whether to increase a given employee’s minimum compensation to maintain exempt status or switch the employee to non-exempt status.  If an employer switches an employee to non-exempt status, the employer needs to decide how it will set the hourly rate.  And for employees regularly working more than 40 hours, employers will need to think about the financial impact of overtime pay.

For more information on these changes, please see the DOL’s announcement. The DOL also has announced webinars to review the above rule changes. View the webinar schedule here.

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