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U.S. Department of Labor, Wage and Hour Division, announced its final changes to the regulations that govern the Fair Labor Standards Act’s “white collar” overtime exemptions.  Some of the changes are slightly different than what was proposed in 2015.  Here’s the bottom-line.  The final rule:

 

·         Sets the minimum salary level for the administrative, executive and professional overtime exemption at $913 per week ($47,476 annualized) – up from the current $455 per week ($23,660 annualized), but down from the proposed $970 per week ($50,440 annualized);

·         Sets the total compensation level for highly-compensated employees (HCE) at $134,004 annually – up from the current $100,000;

·         Provides for automatic increases in the salary level every 3 years (beginning January 1, 2020) – with the minimum salary level indexed for to the 40th percentile of full-time salary workers in the lowest wage Census region (currently the Southeast region), and the HCE level                 indexed to the 90th percentile of national full time salary workers;

·         Allows employers to count nondiscretionary bonuses and other incentive payments, including commissions, paid on at least a quarterly basis, for up to 10% of the minimum salary level;

·         Allows for a quarterly make-up payment, although the details on the make-up payment are not yet available;

·         Does not make changes to any of the duties-based requirements (or the concurrent duties test) in any of the white-collar exemptions;

·         Does not make changes to the salary basis test, other than increasing the salary level; and

·         Becomes effective on December 1, 2016, which is approximately 200 days to prepare for implementation.

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