The New Overtime Laws: What Employers Should Be Doing

01 November 2016 Publication
Author(s): Carrie Hoffman

Texas Lawyer

On May 18, 2016, the Department of Labor issued its final regulations establishing a new salary threshold for employees exempt under the “white-collar” exemptions (executive, administrative and professional). These new rules become effective on Dec. 1.

The guaranteed weekly salary prior to this new rule was $455 a week, or $23,660 annually. Beginning Dec. 1, this new salary threshold will be $913 per week (the equivalent of $47,476). To help ensure that an employee is earning at least this minimum threshold, an employer can offer a bonus of up to 10 percent of salary, provided that the bonuses are paid at least quarterly. Finally, although there were no changes to the duties tests which determine whether an exemption applies, the DOL also implemented an automatic review of salaried threshold every three years to ensure that the salary is at least at the 40 percent of the lowest paid census region (currently the South).

Under these new regulations, any employee earning less than $913 a week is eligible for overtime pay. Employers can avoid this trigger by raising the employee’s salary to the new, minimum threshold. With the Dec. 1 deadline fast approaching, employers with currently exempt employees earning less than $913 a week must decide whether to increase employees’ salaries or convert them to nonexempt and begin paying overtime.

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