Wednesday, May 18, 2016

The Top Ten Things Employers Need to Know About the New FLSA Regulations Released Today

Today the United States Department of Labor issued the long-awaited, updated Final Rule revising the federal regulations under the Fair Labor Standards Act ("FLSA") implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees.  Here are the highlights from the 508-page release that employers need to know:
  1. The salary test for EAP workers (defined as executive, administrative and professional employees under the current FLSA tests) has more than doubled from $455 per week ($23,360 per year) to $913 per week ($47,476 per year).  
  2. The DOL did not make any changes to the EAP duties tests.
  3. The highly-compensated employee total annual compensation level has increased from $100,000 to $134,004.
  4. For the first time, employers will be permitted to count non-discretionary bonuses, incentives, and commissions toward up to 10% of the standard weekly salary test, as long as employers pay those amounts on a quarterly or more frequent basis.
  5. The DOL will permit a "catch-up" payment at the end of each quarter with respect to the 10% amount noted in #4 above provided it is made within one pay period of the end of the quarter. Any such catch-up payment will count only toward the prior quarter's salary amount and not toward the salary amount in the quarter in which it was paid.
  6. White collar employees subject to the salary level test earning less than $913 per week will not qualify for the EAP exemption.
  7. The Final Rule provides for salary and compensation threshold updates every three years, and the first update will take place on January 1, 2020.
  8. The DOL contends the new regulations will decrease the amount of litigation.
  9. Employers will be forced to make some difficult choices related to reclassifying employees.
  10. The effective date for the Final Rule is December 1, 2016, which means employers have about six months to become compliant.