Changes to Fair Labor Standards Act

CHANGES TO THE FAIR LABOR STANDARDS ACT ANNOUNCED

The United States Department of Labor (DOL) announced today major alterations to the overtime exemption classifications under the Fair Labor Standards Act (FLSA). These changes have dramatic ramifications for all employers and it is strongly advised that you familiarize yourself with them as they may affect your budgeting for 2017.

Beginning December 1, 2016, the salary threshold for overtime exempt employees will increase from $23,660 to $913 per week or $47,476 annually for a full-year worker. This means that any employee whose salary is less than $47,476 will be eligible for overtime pay beyond their normal 40 hours per week schedule. Updates to the salary threshold levels will occur automatically every three years (with at least 150 days notice and effective January 1, 2020). 

 

DOL will be allowing up to 10 percent of the salary threshold to be met by a non-discretionary bonus (including commissions).  However, these bonuses must be paid quarterly (or more frequently). DOL will permit employers to make a “catch-up” payment if the bonus and salary falls short of satisfying the salary threshold in a quarter.

DOL decided against making any changes to the “duties tests” for the Executive, Administrative and Professional occupational classifications. This is good news for industry because DOL suggested that it mirror various tests currently in effect in California.

PIA, and a few other industries, asked that specific occupations be deemed exempt from overtime under certain conditions.  PIA asked for Customer Service Representatives to be classified as exempt if they had the authority to “stop a job” anywhere in production. DOL decided not to write any new exemptions in the regulation but left the door open for employers to argue their position on a case-by-case basis.

 

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