The final rules are finally final. The Department of Labor has issued final rules regarding the salary threshold for employers to establish workers as exempt employees under the Executive, Administrative and Professional exemptions. Now, employers must pay workers a salary of at least $913 per week, or $47,476 annually, in order to meet the first prong of the exemptions. As the previous rate was $455 per week, many employers must almost double the minimum salary they pay in order to keep employees exempt from overtime. In addition, for the highly compensated employees exemption, the annual salary threshold has been raised to $134,000 from the previous $100,000 annual salary.
Important to note: Employers may use bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
Finally, the final rule provides for automatic updates to the salary and compensation thresholds every three years beginning in January 2020, to maintain wage growth over time. The clock’s ticking. The effective date of the final rule is December 1, 2016. Employers have about six months to have their job descriptions, payroll structures and internal policies comply with the final rules. Will you be ready? If your team needs support preparing for these final rules, contact KPPB LAW’s labor and employment law attorney Radha Thiagarajan at rthiagarajan@kppblaw.com. Let the countdown begin!
