18 May Salary Level Increase Announced by DOL
• The new minimum salary level for white collar exemptions will be $913 per week or $47,476 per year. The current level is $23,660, so it has more than doubled.
• The new salary threshold will become effective December 1, 2016, and it will be adjusted every 3 years to track the 40th percentile of the lowest wage census region, the Southeast.
• Non exempt positions require tracking time and paying overtime (1.5 x regular hourly rate) for hours worked over 40 in the work week.
• For the first time, employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level, as long as those payments are made on a quarterly or more frequent basis.
• The total compensation requirement to qualify for the highly compensated employee (HCE) exemption will increase from $100,000 per year to $134,004 per year, which is based on the 90th percentile of earnings for full-time salaried workers in the United States, without regard to regional differences. This will also be adjusted every three years.
• The Department of Labor did not make any changes to the duties tests for the white collar exemptions.
We recommend a review of your salaried exempt positions to identify those who are below the new threshold. You can either raise their salary and bonus/commissions to maintain the exemption or reclassify the position as non-exempt.
The experts at Resource Alliance will continue to provide guidance and support as the required implementation of this new law arrives. If you are planning to reclassify positions as non-exempt, let’s discuss a plan for the transition. Call us with any questions.
To read about these changes on the Department of Labor website visit https://www.dol.gov/whd/overtime/final2016/.
Scott Mastley, SPHR, MBA, is the Vice President of Human Resources for Resource Alliance.
Scott is a consultant, not an attorney, so he shares his opinions, not legal advice, about increasing performance and limiting liability.