On May 18, 2016, the Department of Labor issued its long awaited regulations increasing the salary and compensation levels required for executive, administrative, and professional workers to qualify as "exempt" from overtime requirements.
Key provisions of the final rule include:
- Setting the standard salary level at $47,476 annually or $913 per week (up from the prior $23,660 annually/$455 per week);
- Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level;
- Changing the highly compensated employee threshold to $134,004 (up from $100,000) – this is the level of compensation where an employer only has to make a minimal showing to demonstrate an employee is ineligible for overtime; and
- Establishing a mechanism for automatically updating the salary and compensation levels every three years.
The effective date of the final rule is December 1, 2016. Future automatic updates to the current thresholds will occur every three years, beginning on January 1, 2020.
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