Department of Labor Releases Final Rule for FLSA Overtime Exemptions (Video)

Is your company aware of the recent release of the final rule for overtime exemption? Be sure you are up to date with all the new FLSA updates. In this video, Lisa Smith goes into a brief overview of the ruling.

Transcript

As you probably know, the Department of Labor released their final rule regarding overtime exemptions on May 18th. Yes, this long awaited rule is now actually going to become law.

So there are a lot of mixed emotions. Some people are really happy, and some folks are really trying to figure out what do we do next. So let’s talk about that.

As you may know, the final rule says that the minimum base salary for an overtime exempt individual beginning December 1st of 2016 is going to be $913 every week of the year. Currently, the rate is $455. So $913 is just above double.

What else did the final rule say we have to get ready for? Well, the final rule, for the first time in FLSA history, is going to allow an employer to use up to, but not exceeding, 10% of commissions and non-discretionary bonuses to count toward the annual rate of pay.

Now here is the ticker. If you’re an employer that likes to bonus out on an annual basis, then we have a problem because the Department of Labor said that this calculation has to be performed quarterly. And if your organization has not paid the employee at least $913 a week including bonuses and commissions, then at the end of the quarter, the employer will have to go ahead and supplement bringing that employee up to the average of $913 a week. And that catch up has to be performed no later than the first pay period of the new quarter. Yes.

So if you are an annual bonuser and these bonuses are non-discretionary, then you may want to get ready to revamp your bonus structure because doing it quarterly will allow you to keep track of that 10% allowance that you now have.

Well, there you have it. Yes, the final rule is much more complicated than this, and yes, there are many options that employers have when we discussed what are we going to do to meet these requirements, but we’ll do that in my next blog. Until next time, I’m Lisa Smith. Remember, you can’t be audit proof, but if you do it right, you can be audit secure.


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