In 2014, President Obama issued a Presidential Memorandum directing the U.S. Department of Labor (DOL) to update its regulations surrounding the minimum wage and overtime exemptions under the Fair Labor Standards Act (FLSA). DOL issued its proposed updates in July 2015 and gave the public until September 2015 to provide comments. On May 18, 2016, DOL issued its Final Rule amending the FLSA regulations. The most noteworthy items for employers to know are below:
Minimum Salary: The minimum weekly salary for exempt employees increases from the current $455 per week ($23,660 annually) to $913 per week, or $47,476 annually.
Bonuses and Commissions May Now Be Included: The new rules allow non–discretionary bonuses, incentive payments and commissions to count for up to 10% of the minimum salary for an exempt employee, provided these amounts are paid at least quarterly.
Highly Compensated Employees: The annual minimum salary threshold for exempt employees classified as “highly compensated” will increase from $100,000 to $134,004.
Effective Date: Employers must implement the new provisions beginning December 1, 2016.
Automatic Updates: The new rules provide a formula for updating the minimum salary amounts once every three years going forward. The first such update will take effect on January 1, 2020.
For a detailed discussion, you may review the full text of the rule on the DOL’s website.