The United States Fair Labor Standards Act of 1938 requires that employees be provided overtime pay unless they qualify under one of the FLSA exemptions. On May
- Increase the minimum weekly salary to $913 ($47,476 annually) to be considered exempt. The current limit was $455 per week or $23,660 annually.
- Increase the highly compensated employee exemption total compensation to $134,004. The current threshold is $100,000.
- Establish a mechanism for an automatic update of salary limits and thresholds every three years.
- Amend the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard level.
The effective date of this final rule is December 1, 2016. Employers need to consider the many issues, decide on a course of action, and then have all programs and documented policies in place by this December date. Failure to be in compliance with the new requirements can result in significant employer liability. The changes outlined in the final rules will likely impact financial results, human resources, and information systems.