The DOL released its final regulations on May 18, 2016, making changes to Part 541 governing overtime exemptions under the Fair Labor Standards Act.

Here are the key elements of the new regulations that you need to know:

  • Salary Threshold Changed to $913/week ($47,476 per Year)
  • Automatic Salary Threshold Increases every 3 years (not annually) to maintain level at 40th percentile.
  • The Duties Test remains unchanged.
  • Effective date is December 1, 2016.
  • Highly Compensated Employee (HCE) Exemption is now $134,000 per year.

What does this mean for your organization? It is estimated that 35% of full-time salaried workers are expected to fall below the threshold under the new rule.

The next steps you should take are to:

  • Identify which exempt employees could be aected;
  • Calculate the hours worked by aected exempt employees (you may have to ask them to track hours for a time period);
  • Consider which compensation strategy is the most appropriate;
  • and Conduct a compensation analysis for each employee.

For more guidance, please reach to Payday HCM’s HR Consultants (1-888-2PAYDAY) for assistance with navigating your way through the new rule.