New Federal Fair Labor Standards Act Regulations

Department of Labor – Overtime Rules Effective Date: December 1, 2016. The biggest change made under the rule is the salary test to determine if an employee is exempt or not. Exempt employees under the Fair Labor Standards Act (FLSA) are not required to be paid overtime if they work over 40 hours a week. These are usually salary employees who perform executive, administrative, or professional duties. The rule can be seen in its entirety at: https://www.gpo.gov/fdsys/pkg/FR-2016-05-23/pdf/2016- 11754.pdf

Exempt vs. Non-Exempt Test (To be exempt the answer to each question must be yes) 1) Salary Test Does the employee get paid by the hour or by annual salary?

Exempt vs. Non-Exempt Test (To be exempt the answer to each question must be yes) 2) Salary Level Test Does the employee’s salary exceed $47,476 annually or $913 per week? This is the key changed made under the new rules. The salary threshold was increased from $23,660 annually or $455 per week.

Note Up to ten percent of the salary amount required by this rule may be satisfied by the payment of nondiscretionary bonuses, incentives, and commissions, that are paid quarterly or more frequently.

Exempt vs Non-Exempt Test (To be exempt the answer to each question must be yes) 3) Duties Test Are the job duties of an employee considered executive, administrative, or professional in nature? This inquiry is fact intensive and depends on the circumstances of the employees employment.

Job Duties Considered Executive in Nature Regularly supervises two or more other employees, and also has management as the primary duty of the position, and also, has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments). interviewing, selecting, and training employees; setting rates of pay and hours of work;

Job Duties Considered Executive in Nature Maintaining production or sales records (beyond the merely clerical); Appraising productivity; handling employee grievances or complaints, or disciplining employees; Determining work techniques; Planning the work; Apportioning work among employees; Determining the types of equipment to be used in performing work, or materials needed; Planning budgets for work; Monitoring work for legal or regulatory compliance; Providing for safety and security of the workplace

Administrative in Nature The employee’s primary duty must be 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 The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

Professional in Nature The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; The advanced knowledge must be in a field of science or learning; and The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Automatically Updated Every Three Years The Department is establishing mechanisms for automatically updating the salary and compensation levels every three years to maintain them at the levels set in this rulemaking. The Department will publish a notice of the new updated thresholds in the Federal Register at least 150 days before those updated amounts take effect, and also publish these updated rates on the Wage and Hour Division's website. The Department will update the standard salary level to maintain it at the 40th percentile of weekly earnings of full- time salaried workers in the lowest wage Census Region.

Summary Bottom line is that because of the increase in the salary threshold test, some employees will move from the exempt category to the non-exempt category. This means that these employees who are now non-exempt must be paid overtime wages under the Fair Labor Standards Act. Dept. of Labor fact sheet https://www.dol.gov/whd/overtime/final2016/overtime- factsheet.htm Final Rule https://www.gpo.gov/fdsys/pkg/FR-2016-05-23/pdf/2016- 11754.pdf

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