Update on the Department of Labor’s Final Overtime Regulations D. Patrick Lacy, Jr. Stacy L. Haney Reed Smith LLP 901 East Byrd Street, Suite 1700 Richmond, VA 23219

Significant Changes to the “White Collar” Exemptions Increase in the minimum salary threshold to $913 per week or $47,476 per year. Up to 10% of salary for exempt executives, administrators and professionals can be non-discretionary bonuses, incentive pay or commissions, if made on at least a quarterly basis.

Significant Changes to the “White Collar” Exemptions (cont’d.) Increases the annual compensation level for “highly compensated employee” exemption from $100,000 to $134,004. Salary thresholds will be updated every three years. Does not modify the duties tests for “white collar” exemptions.

Executive An employee must meet the following criteria to qualify as an exempt executive: The employee must be compensated on a salary basis at a rate of not less than $913 per week ($47,476 annually), exclusive of board, lodging or other facilities; The employee’s primary duty must be management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

Executive (cont’d.) The employee must customarily and regularly direct the work of two or more other employees; and The employee must have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees.

Administrative The employee is compensated on a salary or fee basis at a rate of not less than $913 per week ($47,476 annually), exclusive of board, lodging or other facilities; The employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

Administrative (cont’d.) The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Professional The employee is compensated on a salary or fee basis at a rate of not less than $913 per week ($47,476 annually), exclusive of board, lodging, or other facilities; and The employee’s primary duty is the performance of work:

Professional (cont’d.) Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Teachers Primary duty of teaching, tutoring, instructing or lecturing in the activity of imparting knowledge. Engaged in this activity as a teacher in an educational establishment by which the employee is employed. Salary requirements do not apply.

Highly Compensated Employees The employee is paid a total annual compensation of $134,004 or more, which includes at least $913 per week on a salary or fee basis; and The employee performs office or non-manual work and regularly performs at least one of the duties of an exempt executive, administrative or professional employee.

What Should School Boards Do to Protect Themselves? Determine whether any of their “exempt” employees paid on a salary basis earn less than $913 per week (or $47,476 per year). Consider raising that employee’s salary; or Treat that employee as non-exempt and pay overtime; or Adopt comp time policy/regulation.

What Should School Boards Do to Protect Themselves? (cont’d.) Examine and assess the job duties of all of their employees who meet the salary threshold. Update all job descriptions to ensure they are worded appropriately and to ensure that they use the regulations’ appropriate “buzzwords.”

What Should School Boards Do to Protect Themselves? (cont’d.) Review and, if necessary, revise job descriptions to ensure that they reflect the employee’s primary duty as one that fits the applicable exemption. Explain/implement a policy requiring all non-exempt employees to record their time worked.