Department of Labor Releases New Overtime Rules

In May, the United States Department of Labor  issued its final rule updating the regulations governing the exemption of employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act. Significant components of the final rule are as follows:

1. Sets the standard salary level at $913 per week or $47,476 annually for a full-year worker;

2. Sets the total annual compensation requirement for highly compensated employees subject to the duties test to $134,004.

3. Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level, so long as they are provided on a quarterly or more frequent basis; and

4. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Notably, the final rule makes no changes to the duties test. Employers have until December 1, 2016 to comply with the new rule.