Employment Bulletin
On May 18, 2016, the United States Department of Labor (DOL) published a longexpected final rule that more than doubles the salary threshold required for employees to qualify for the executive, professional, or administrative exemptions allowed by the Fair Labor Standards Act (FLSA).
Under the current law, for an employee to be exempt from the FLSA’s overtime provisions, he or she must earn at least $23,660 per year ($455 per week) on a “salary basis” and perform the job duties described in the Executive, Administrative, Professional and other exemption categories recognized by DOL. Effective December 1, 2016, however, that salary threshold will rise to $47,476 ($913 per week). The job duties tests will not change. This salary increase will mark the first increase in the salary threshold since 2004. The updated final rule is expected to enable approximately 4.2 million additional employees to earn overtime pay.
In addition to doubling the overtime salary threshold, the final rule also:
• increases the total annual compensation requirement for highly compensated employees (HCE) from $100,000 to $134,004;
• establishes a mechanism for automatically updating the salary and compensation levels every three years, beginning on January 1, 2020; and
• amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The full text of the final rule can be accessed beginning May 23, 2016 at http://federalregister. gov/a/2016-11754.
Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com, or Stephen A. Antonelli (412) 394-5668 or santonelli@babstcalland.com.
