U.S. Department of Labor announces final rule raising minimum salary level for exempt executive, administrative and professional employees as of December 1

By Rudman Winchell Attorney Frank T. McGuire

On May 18 the Wage and Hour Division of the U.S. Department of Labor published a final rule to be effective as of December 1, 2016, which raises to $47,476 the minimum salary level for exemption from overtime pay for salaried executive, administrative, professional and computer employees.

Current law exempts employers from paying overtime to salaried workers in these categories if the salary level is at least $455 per week, or $23,660 per year.  As of December 1, 2016, the new minimum level will be $913 per week, or $47,476 per year.

Up to ten percent of the required salary amount may be satisfied by payment of nondiscretionary bonuses, incentives and commissions, paid quarterly or more frequently.

The Department did not change the “duties” test for exempt status.

The new salary level will remain in effect until January 1, 2020, when it will be raised to match the 40th percentile of pay for non-hourly workers in the lowest-wage Census Region, measured as of March 31, 2019, and to be announced by August 3, 2019.

Covered employers who now have exempt salaried workers at salary levels below $47,476 must decide whether to raise salary levels to this new minimum, or treat the employees as non-exempt.  Employers must carefully record hours worked of non-exempt employees and be sure to pay overtime for work hours over 40 each week at one and one-half times the regular rate.

For assistance with planning to comply with the new rules contact an experienced Rudman Winchell employment attorney.

 

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