The Department of Labor has issued its much anticipated updates to the white-collar worker overtime regulations. The new regulations increase the salary-level threshold from $23,660 to $47,476, or approximately $913 a week. The salary-level threshold for being considered a highly compensated employee for overtime purposes has also increased from $100,000 to $134,004.
In addition to the increases, the regulations include adjustments to the thresholds every three years based upon the 40th percentile of full-time salaried workers in the lowest-wage census region for the salary threshold and the 90th percentile for the highly compensated employee threshold. The updated regulations are expected to impact approximately 4.2 million Americans this year.
The final regulations allow nondiscretionary bonuses to satisfy up to 10 percent of the salary-level threshold requirement. This is a change from previous regulations. Nondiscretionary bonuses are bonuses that are expected or promised to an employee and are generally dependent upon an employee’s quality, quantity, or efficiency of work.
The updated regulations have not changed any requirements listed under the duties test for white-collar workers.
These new regulations are effective December 1, 2016, and therefore have a relatively short implementation period for employers. Employers should begin examining those positions affected immediately in order to ensure proper classification and compliance. Experts from Plante Moran’s Employee Benefits Consulting team have assembled resources to help explain the changes and the impact they may have on your organization.