As you might already know, new overtime regulations will come into full effect this December (December 1, 2016). Below is a members-only letter from The Employers Association (TEA) regarding these changes, and, as one of our partners, they’ve given us permission to share with you! TEA is known in Charlotte for their human resources and training services and for helping employers build successful workplaces. Also, be sure to check out this upcoming class on the new overtime regulations, hosted by SCORE and TEA.
Dear TEA Member,
The Department of Labor (DOL) just released the long-awaited changes to the “White Collar” exemptions. As we have shared several times over the past year, the DOL proposed sweeping changes to the rules that dictate who is exempt from overtime and the salary level that is required to maintain that exemption.
***These new rules will come into effect Thursday, December 1, 2016. ***
Many employers find it difficult and confusing to interpret wage and hour regulations. Most organizations will have team members who are currently classified as exempt who will fall below the new threshold, thus becoming nonexempt employees. Also, many organizations already have at least one team member who is likely misclassified and paid improperly. Now is a critical time for employers to review how they have ALL employees classified and make adjustments.
Read below for a summary of the most significant changes and several upcoming events we have planned to help our members understand and implement the changes.
New Minimum Salary Threshold
The new minimum salary level to be an exempt employee will be $913 per week, or $47,476 per year. This number is tied to the 40th percentile of all salaried workers in the lowest wage region of the country’s five census regions, which at this point is the Southeast region.
The minimum salary level will be adjusted every three years to track the 40th percentile of all full-time salaried workers in the lowest wage census region (which is currently the Southeast). The first update will take effect on January 1, 2020.
Bonuses and Incentives
For the first time, employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the salary level, provided those payments are made on a quarterly or more frequent basis.
Highly Compensated Employees
The total compensation requirement for the highly compensated employees will increase from $100,000 to $134,004. This number is based on the 90th percentile of earnings for all salaried employees in the country, without regard to regional census region differences. The total compensation for the highly compensated employees will also be adjusted every three years so that it
continues to correspond to the 90th percentile.
There will be NO changes to the “duties tests” that determine who is an exempt employee.
We will keep our members informed as more details are shared. Stay tuned for future articles and registration details for the breakfast briefings. As always, if you have questions or need assistance, feel free to contact our HRAdviceLine team at 704-522-8011.
Kenny Colbert, SPHR, SHRM-SCP
President & CEO
The Employers Association