The DOL’s New Overtime Rule Effective 12/01/16

by Kim Manrow & Josh Amidon

As some of you may know, the US Department of Labor made a long-anticipated (or dreaded, depending on your viewpoint) change to rules on overtime pay under the Fair Labor Standards Act. President Obama acted in another sweeping Executive Decision aimed at Business Owners in a still weak economy.

As a quick recap, the changes include:

·        Increases the minimum annual salary for exempt employees from $23,660 to $47,476 (or from $455/week to $913/week).

·        Increases the minimum annual salary for exempt highly compensated employees from $100,000 to $134,004.

·        Automatically increases or update these thresholds every three years.

Some other fast facts about the new law.

·        Although the rule was published last month, the changes don’t go into effect until 12/1/16. The only way this could change is if Congress writes a bill to overturn/change the rule – which is very unlikely, because it would have to survive a veto from President Obama.

·        The tests for determining who is an exempt employee have not changed.

·        All For-Profit and Not-for-Profit entities with Gross Sales over $500,000 must comply

·        We expect special rules and additional exemptions to come out once the DOL starts to answer the thousands of inquiries very concerned business owners look at the impact this will have on their business.  

Lastly, please keep in mind – this is only the federal rule. The New York State limit was already above the Federal Minimum of $455.00, at $ 600.00.  The new Minimum Wage Laws have prompted NY to make adjustments, but will likely now base their decision on the Federal Mandates.  That information is not yet available.

We urge you to spend some time and review how this decision will affect your business.  Many companies are talking layoffs mixed with price increases.  Also, be aware that the DOL aggregates income, so if you own multiple companies they will add  $500,000 threshold and also look hard at employees doing multiple jobs at different rates.

We will keep you posted on rulings, filed court cases and MOUs for the latest news of this costly new regulation.

We know this can be very confusing, this is why we have HR professionals who can assist in navigating your company through these new laws and guidelines. Please feel free to reach out to us at (315) 258-8780 for more info.