Federal regulation change raises salary levels for overtime pay

The Department of Labor has issued the long-anticipated changes to the overtime regulations within the Fair Labor Standards Act (FLSA). Effective December 1, 2016 the salary level required to be exempt from overtime (along with continuing to meet existing duties test requirements) will be $47,476 or $913 per week.

The current minimum salary for an employee classified as exempt from overtime is $455. The change in regulations means that you must either change the salary or reclassify any employee earning at least $455 but less than $913 to meet the new minimum requirement. If reclassifying, an employee would be moved to non-exempt status and compensated at time and one-half for any hours worked over 40 in a given work week.

In addition to increasing the minimum salary for exemption, the new regulations also require that the standard salary amount be updated every 3 years moving forward. The salary level has been set at the 40th percentile of full-time salaried workers in the lowest income region in the country, which is currently the South. Based on projections of wage growth, the DOL believes the minimum salary will be more than $51,000 by January 1, 2020.

In the coming weeks a BCN Services Human Resource specialist will reach out to you to help review your business structure as it relates to this new law. We look forward to assisting you in successfully managing any redesign, plan and implementation in the near future. If you have immediate questions, please contact us at 1-800-891-9911.

Alicia Freeman, Operations Manager

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