DOL Finally Issues New Exemption Rules

The U.S. Department of Labor (“DOL”) issued the final version of the long-awaited overtime exemption rule on May 18, 2016. As predicted, the rule raises the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemptions from $23,660 to $47,476 per year. The DOL will automatically update the salary threshold every three years, based on wage growth.

The new rules may be found online at https://www.dol.gov/WHD/overtime/final2016/. The new rules are set to take effect on December 1, 2016 and will purportedly allow 35% of all workers to qualify for overtime.

Employers will now face some new challenges, including financial ones, beyond just the additional costs of overtime. Formerly exempt employees, who now are non-exempt under the new rules, must now be trained on time-keeping requirements and limiting work to otherwise authorized work hours. Those employees, who have been accustomed to greater flexibility and variable work hours and schedules in the past, may now need to be managed more closely to limit unauthorized overtime. In some cases, employers may be faced with a choice between paying the required overtime to some newly non-exempt individuals, on the one hand, and raising the compensation of some to above the new threshold to permit an exempt classification, on the other.

If you have any questions about how to comply with the new exemption rules or how the rule might otherwise affect your business, please contact Karl R. Ulrich at kulrich@ssdlaw.com

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