Photos by: US Department of Labor
What employers need to know about this new rule?
The US Department of Labor (DOL) recently issued its final rule on increasing minimum salary requirements for executive, administrative, and professional employees including outside sales and computer employees. This new rule goes into effect December 1, 2016.
Key provisions of the rule to remember:
- Increase the minimum salary for professionals and salaried employees from $455 to $913 per week.
- Increase the total annual compensation for highly compensated employees (HCE) to $134,004. To be exempt as an HCE, an employee must also receive at least the new standard salary amount of $913 per week on a salary or fee basis and pass a minimal duties test.
- Employers will be allowed to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
- Salaries will continue to be automatically updated every three years to maintain a threshold equal to the 40th percentile of weekly earnings of full-time salaried workers.
The DOL offers the following suggestions for responding to the salary changes:
- Raise salary and keep the employee exempt from overtime.
- Pay overtime in addition to the employee’s current salary when necessary.
- Evaluate and realign hours and staff workload.
Employers can visit https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm for helpful guidance on becoming compliant by the end of this year.
By Treena Burton.