Final Overtime Rules Released; What’s Next for Employers?

By Tom Peak

Click here to view a chart showing the differences between current regulations and the final rule

Many of our clients have been “waiting for the other shoe to drop” with respect to the proposed revisions to the “white collar” exemptions to the overtime requirements under the Fair Labor Standards Act, since the proposed (revised) rules were announced in June of 2015, and since the comment period ended last September. Well, it has dropped, and after receiving some 300,000 comments, there was good news and bad news for employers in the final rules, which will be effective Dec. 1, 2016.

The good (or, more accurately, “less bad”) news is that the new minimum salary requirement (to qualify for the exemptions) was lowered from $50,440 ($970/week) under the initial proposal to $47,476 ($913/week) under the final rules. Additionally, the minimum salary level will be subject to adjustment every 3 years, rather than annually, as initially proposed, qualifying non-discretionary bonuses and/or incentive payments (such as commissions) may be used to satisfy 10% of the minimum salary requirement, and there were no changes to the duties test, as was initially possible and feared.

The bad news is that, effective Dec. 1, 2016, many employees who are presently exempt and earning between $23,660 and $47,475 as annual salaries, will no longer be exempt, entitling them to overtime pay for hours worked in excess of 40 hours in a workweek and requiring employers to review/revise job classifications and compensation levels and/or implement pay plans in order to mitigate the impact on their bottom line and comply with the law.

Please let us know if we can help, as there are several ways to comply with the law WITHOUT simply raising salaries to the new minimum requirement.

The attorneys in Taylor Porter’s Employment, Labor and Benefits practice group offer a combined more than 100 years of experience in labor and employment law. They have assisted clients in connection with compliance with federal, state and local employment regulations and are experienced in handling labor negotiations, union grievances and arbitrations, Civil Service matters, and representing employers before federal and state regulatory agencies such as the EEOC, the Department of Labor, and the State Civil Service Commission. They have reviewed and revised employment policies and manuals as well as provided comprehensive legal support to employers in all aspects of the employment relationship. They have authored and annually update Louisiana Employment, the treatise on employment law as it applies to Louisiana employers.