New Overtime Law

The Department of Labor has announced an important change in the Overtime Law.

The new overtime law raises the salary threshold from $23,660 per year ($455 per week) to $47,476 per year ($913 per week).

Under the current law, employees who perform certain executive, professional or administrative duties, and earn more than $23,660 per year, are not eligible for time-and-a-half pay for hours beyond 40 in a week.

The new overtime law will make these employees eligible for overtime pay if their annual salary is $47,476 or lower.

Moreover, the Department of Labor will automatically update the salary threshold every three years.

The new law allows for bonuses and incentive payments to count for up to 10 percent of the new salary level.  Finally, the law lifts the “highly compensated employee” threshold from $100,000 to $134,004. This is the level above which “only a minimal showing is needed to demonstrate an employee is not eligible for overtime.”

 The law will become effective on December 1, 2016.

 Employers must review the status of their “exempt” employees whose salaries will not meet the new threshold.  If an employer wants to continue to classify those employees as “exempt,” it will have to make sure that their salaries meet the new threshold. 

Alternatively, employers may choose to reclassify positions as non-exempt, in which case they have a number of choices concerning the method of payment.  Additionally, employers will need to train both managers and the newly non-exempt employees they supervise on a range of issues, such as refraining from off-the-clock work and recording actual hours worked.

Contact Luchansky Law today to ensure that you are in compliance with the new overtime law.

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