Final regulations will extend overtime pay to millions of workers who were previously ineligible.
On Wednesday, the Department of Labor released the final overtime pay regulations, set to go into effect at the end of this year.
John Thompson, an attorney with Fisher & Phillips, a national labor and employment law firm that represents employers, has outlined the changes that the U.S. Department of Labor has made to overtime regulations.
Below is an outline of the changes from Thompson:
The details of the U.S. Department of Labor’s final revised regulations defining the executive, administrative, professional, “outside salesman” and derivative exemptions under the federal Fair Labor Standards Act’s Section 13(a)(1).
The highlights include:
- The provisions will go into effect on Dec. 1, 2016,
- The salary threshold for exempt status will increase to a rate of $913 per week,
- The total-annual-compensation threshold for the “highly compensated” exception will increase to $134,004,
- Both thresholds will be “updated” every three years, beginning on Jan. 1, 2020,
- Employers will be able to satisfy up to 10% of the salary threshold from “nondiscretionary bonuses and incentive payments,” including commissions, paid on a quarterly or more-frequent basis (but this will not be permitted as to the salaries of employees treated as exempt under the exception for highly-compensated ones),
- No duties-related requirements were changed.
Lyle Beckwith, National Association of Convenience Stores (NACS) senior vice president of government relations, responded to the announcement of the final overtime rules with the following statement:
“The use of flawed methodology and reasoning by the U.S. Department of Labor in designing just-released final overtime pay regulations will be devastating to convenience store owners, their workers and customers.
“The regulations, set to be implemented on December 1, 2016, will double the previous salary threshold for designating managerial employees as exempt from overtime from $455 to $913 a week, an unreasonably high level that fails to follow past precedent of tailoring dollar tests to reflect the financial characteristics of retailing, and thereby ensuring that resulting salary increases not impose a disproportionate hardship the sector. DOL also relied on measurements of non-salary income and salaries in high-wage regions in formulating the threshold.
“As a result, thousands of store managers and assistant managers, who are paid annual average salaries of $39,528 and $25,771, respectively, will change virtually overnight from exempt status to nonexempt status.
“NACS recognizes that the overtime pay regulations, which are more than a decade old, need to be updated to reflect current economic conditions. However, the workable increase in the threshold for exempt employees will defeat the stated purpose of the regulations by driving down overall wages and employment in the convenience store industry.
“NACS encourages the administration and Congress to withdraw the regulations, re-examine the basis on which they were devised and re-issue them with a new threshold that takes into account the economic realities facing the retail industry and thereby reflects the best interests of these job-creating businesses.”