The Department of Labor has finalized regulations that increase the minimum salary requirement for the executive, administrative, professional, and technical employee exemptions from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). The new rules become effective December 1, 2016.
Start planning now! The change is estimated to impact approximately five million positions that are currently classified as exempt. Will your firm raise salaries to maintain the exempt status of certain jobs? Should you re-classify some positions to make them non-exempt? How will you manage the associated overtime implications?
The minimum salary level will be automatically updated every three years (rather than the annual automatic adjustments, as proposed). Updates will be calculated at the 40th percentile of earnings of full-time salaried workers in the lowest income region of the country. The first automatic update will take place on January 1, 2020, and, based on current projections of wage growth, would increase the minimum salary level to over $51,000.
Note that the amended regulations allow employers to use non-discretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as employers pay those amounts on a quarterly or more frequent basis.
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This Employment Law Alert provided by:
United Employers Association
906 NE 19th Ave. Portland, OR 97232
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