In May 2016, the U.S. Department of Labor (DOL) announced final provisions updating the Fair Labor Standards Act (FLSA) rules regarding overtime. The rule has been the subject of a great deal of controversy for its ambitious changes to the thresholds for overtime-exempt employees and its automatic readjustment of those thresholds every three years. Your local labor and employment lawyer has the details here.
Key Provisions in the New Overtime Rule
The new overtime rule contains the following specific provisions that affect thousands of employers nationwide:
- Sets the prevailing salary threshold at the fortieth percentile of earnings for full-time salaried employees. In 2016, this number was $47,476 per year, or $913 per week.
- Sets the complete annual payment requirement for “highly compensated employees” (HCE) at the ninetieth percentile of full-time salaried employees, or $134,004 in 2016.
- Creates a mechanism by which these thresholds can be updated automatically every three years.
- Allows employers to use nondiscretionary bonuses and commissions to meet up to 10 percent of the new standard salary levels.
When implemented, the new rule will require employers to pay overtime to workers who make $47,476 per year or less. Overtime must continue to be paid at a rate of one and a half times the worker’s hourly salary, per DOL guidelines. Workers who make more than this $47,476 threshold may be “exempt” from overtime.
When it was announced, the new rule raised a number of concerns from business owners. Since the previous exemption threshold was much lower, many white-collar workers have long been exempt from overtime rules. The new DOL overtime rules would require companies to pay these workers overtime, to increase their overall pay in order to keep them above the new exemption threshold or to hire additional staff in order to ensure that all work could be completed during a 40-hour workweek.
How Does This Rule Apply to My Business?
In November 2016, a federal judge in Texas halted the implementation of the new overtime rule after 21 states filed an emergency motion for a preliminary injunction. The states argued that the rule exceeded the authority of the Department of Labor with its ambitious increase in the salary threshold and its automatic adjustments every three years.
Currently, the stay is still in place as the courts hear arguments from the states and from other groups, including the U.S. Chamber of Commerce, against the rule. Until a final decision is reached, businesses are allowed to continue following the old overtime rules. It is wise, however, to plan for a situation in which the new rule goes into effect, so you can ensure your business complies quickly and efficiently with the new rule if it passes the courts.
If you have a wage and hour question that involves federal or state law, it’s wise to speak to an experienced South Carolina employment law attorney. Your lawyer can help you understand how the law applies to your situation and take steps to protect your legal rights or to right a wrong. If you are in need of sound employment law advice, contact Willcox, Buyck & Williams, P.A. today for a consultation.