CONTRIBUTED BY JESS LEDONNE
Wednesday May 18th the U.S. Department of Labor, Wage and Hour Division, announced changes to the Fair Labor Standards Act’s (FLSA) “white collar overtime exemptions,” determining which employees are entitled to minimum wage and overtime pay. The new rule becomes effective later this year, and will increase the salary thresholds that limit the ability to qualify for overtime pay. The threshold for executive, administrative, professional (“EAP”) level employees was increased from $23,660 annually to $47,476 annually, and the threshold for highly compensated employees (“HCE”) was increased from $100,000 annually to $134,004 annually. These salary thresholds were indexed to an automatic update every three years to track inflation. Estimated effects of the increases, which broaden the pool of employees eligible for overtime pay, have been as high as an additional 4.2 million additional workers that would be newly eligible for overtime pay.
Unsurprisingly, the rules carry with them intricacies and complexities, making it essential that employers fully educate themselves on the changes and the potential impacts on their employee population. Employers have to grapple with how to address employees who are currently classified as exempt but will no longer meet the salary thresholds as of the December 1, 2016 increases.
Contributed by Jess LeDonne