On May 18, 2016, the U.S. Department of Labor (“DOL”) issued its final rules changing the current overtime pay regulations. Effective December 1, 2016, the new DOL rule updates the minimum salary level that Executive, Administrative and Professional employees must be paid to be exempt from the time and one-half overtime pay requirement.

Specifically, to remain exempt from the overtime requirements, an employee must continue to meet the exempt duties test and must also receive total annual compensation of at least $913 per week; $47,476 annually. This is an increase that more than doubles the current annual compensation threshold of $23,660. The new regulations include a provision pursuant to which up to 10% of the new compensation level can be satisfied with non-discretionary bonus and incentive payments paid at least quarterly. Also, the new annual compensation level for highly compensated individuals who must meet the current minimal duties test increases from $100,000 to $134,004. Additionally, the salary levels set forth in the new regulations will be updated every three years by the Department of Labor.

The above information is a brief summary of the new overtime rule changes. There are, of course, a number of options an employer can implement in response to the new regulations. For more information about the new regulations, please call David Knowles or contact him at [email protected].

Wegman Hessler specializes in business law for business leaders, applying legal discipline to solve business problems to help business owners run smarter. For more than 50 years, this Cleveland business law firm provides full-service strategic legal counsel for closely held businesses. Learn more at www.wegmanlaw.com.