The United States Department of Labor (DOL) recently announced new rules to determine whether an employee is entitled to overtime. The new rules take effect on December 1, 2016.
Here is the bottom line: Unless you are paying an employee at least $47,476 per year, he or she will be entitled to overtime (with some limited exceptions). If you pay them less, it does not matter what they do or how you pay them, they get overtime. You can apply what employees receive in non-discretionary bonuses, commissions, and incentive pay toward 10% of the $47,476 threshold.
However, be aware that just because you pay employees at least $47,476 does not mean that they are exempt from overtime. Employees must still qualify for one of the overtime exemptions (such as the Executive, Administrative or Professional exemptions). Most of the exemptions require you to show that the employee is a white-collar employee, paid on a salary basis, who exercises authority or meaningful discretion in his or her daily activities.
There is also an exemption for highly-compensated employees which is easier to satisfy. However, under the new rules, such employees must be paid at least $134,004 per year. Also, they must still primarily perform non-manual tasks and so care must still be exercised to ensure that the exemption applies.
Perhaps the most important takeaway is that these new rules have received significant media coverage. You must assume that your employees will be aware of them, particularly with regard to the new $47,476 salary threshold. To the extent that you have made overtime determinations with which you are uncomfortable, now would be the time to address them.
For further information about this new rule or any other employment-related issue, please contact: Sam Samaro (ssamaro@pashmanstein.com), Maxiel Gomez (mgomez@pashmanstein.com), or Jim Boyan (jboyan@pashmanstein.com).
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