CLIENT ALERT: Department of Labor Issues Final Rule on New Overtime Exemption Requirements

After much discussion and anticipation, the Department of Labor (DOL) announced its new overtime rule will go into effect December 1, 2016. The new rule will raise the minimum salary threshold for exempt employees to $47,476.00 per year ($913 per week). While the increase is slightly less than originally anticipated, the new threshold is more than double the current amount of $23,660 per year ($455 per week). The new rule also increases the threshold for highly compensated employees to $134,004.00 per year.

Employers have approximately six (6) months to determine how to compensate presently exempt employees who earn less than the new minimum of $47,476.00 per year. Available options include increasing the employee’s salary so that it meets or exceeds the new minimum, or converting the employee to non-exempt status.

Remember, if you convert an employee to a non-exempt hourly position, you must pay overtime (time and a half the regular rate) for all hours worked in excess of forty per work week. Time worked generally includes working from home, certain types of travel for work, and even checking emails after-hours. Therefore, on top of figuring out how to pay employees under the new rule, some employers may need to devote additional resources to developing effective timekeeping systems.

The DOL’s new rule also includes a provision which automatically will update these minimum thresholds every three years beginning January 1, 2020.

To learn more about the Overtime Rule, visit the DOL’s website at: https://www.dol.gov/featured/overtime, or contact one of our experienced labor and employment attorneys. The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.

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