The new overtime rule impacts hardworking Americans and businesses alike.
A new overtime rule was scheduled to go into effect on December 1st, 2016; however, the federal district court granted a preliminary injunction that temporarily blocks the U.S. Department of Labor from implementing and enforcing this recently revised regulations on exemptions to the Fair Labor Standards Act (FLSA). Being that this temporary and is believed by many to be implemented at a later date, we wanted to provide you with the information of this new DOL requirement. The Department of Labor (DOL) issued changes that increase the minimum salary requirement for certain exemptions under the Fair Labor Standards Act (FLSA).
The FLSA requires covered employers to pay ‘non-exempt’ employees at least minimum wage for each hour worked as well as overtime pay for all hours worked over a 40-hour workweek. Even though most employees are non-exempt, the FLSA includes exemptions for certain administrative, outside sales, and computer professional employees.
In order to be ‘exempt,’ the employees must meet three qualifications:
- Salary-level test: Employers must pay employees at least the current minimum salary per week.
- Salary-basis test: With very limited expectations, the employer may pay employees their full salary earned, regardless of the quality or quantity of work.
- Duties test: The employee’s primary duties must meet certain criteria.
Additionally, ‘highly compensated’ employees are exempt as they annually earn at least $100,000 ($134,000 effective December 1st, 2016). The salary threshold increased for the executive, administrative, and professional employees as well, raising the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week or $47,476 per year).
For additional information on this new rule, please visit the DOL website here.
Due to the new rules, businesses may need to reassess their employment practices liability insurance (EPLI) coverage, along with other professional lines of coverage from directors and officers (D&O) insurance to errors and omissions (E&O) insurance, as the new rule could affect businesses more than first realized. It’s essential to properly prepare and protect your business.
Find out more information on how to protect your business by contacting Nahai Insurance Services today.