Department Of Labor's Final Rule Changing The Salary Basis Requirements Released Today - Begin Preparing For December 1, 2016 Effective Date
By: Marty Heller
May 18, 2016 - The Department of Labor will be releasing the much anticipated final rule implementing its changes to the salary basis for the Fair Labor Standard Act’s White Collar Exemptions today. In a press release issued yesterday night, the Department of Labor outlined the key changes contained in the final rule, which are set to become effective on December 1, 2016.
The minimum salary payment for the executive, administrative and professional exemptions essentially will be doubled, from the current rate of a minimum of $455 per week ($23,660 per year), up to $913 per week ($47,476 per year). Employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent of the required salary level, so long as these payments are made at least quarterly.
The final rule also adopt a standard that updates the minimum salary for the white collar exemptions every three years, with the salary to be increased so that it is “equal to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region” (which currently is the south).
Finally, the final rule increased the minimum salary to qualify for the “highly compensated employee exemption” from its current level ($100,000) up to $134,004.00.
Although the final rule has not yet been published, the Department of Labor has released a chart showing the differences between the current rule, the proposed rule, and the final rule (as it will be published today). We have copied that chart below for your convenience.
The final rule may be subject to congressional challenges, however, we strongly encourage our clients to begin the process of reviewing all of their salaried exempt positions to determine what changes may need to be made to be compliant with the final rule. This can include changing the status of current salaried exempt employees, or increasing their pay to ensure that they remain properly classified.