On May 18, 2016, the Department of Labor issued final overtime and exemption rules which increase the salary threshold to be exempt from overtime pay. It is estimated that this new law will extend overtime pay to an additional 4.2 million more Americans who are not currently eligible under today’s guidelines.

As Gerriann Fagan said recently in a Birmingham Business Journal interview, “The major change for the overtime rule is the salary threshold for being considered exempt from overtime pay if you fall under three of four exemptions. The salary basis test will allow employers to include nondiscretionary bonuses, commissions and incentive payments to satisfy up to 10 percent of the new standard salary level calculation. Most of the Fair Labor Standards Act has not changed. The act provides for a federal minimum wage and payment of time-and-one-half for hours worked above 40 each week. To be considered exempt from overtime pay, employees must perform certain duties. As an example, to be considered administratively exempt from overtime, one must be involved in business operations, exercise significant independent judgment and be involved in matters of significance.”

You can view additional information from the Department of Labor:

Overtime Exemption Fact Sheet

Exemption for Executive Employees Under the Fair Labor Standard Act (FLSA) Fact Sheet

Exemption for Administrative Employees Under the Fair Labor Standard Act (FLSA) Fact Sheet

Exemption for Professional Employees Under the Fair Labor Standard Act (FLSA) Fact Sheet

While we were expecting these changes, there are still many things to consider when applying these rules to your business. Warren Averett can assist businesses with compliance guidance, calculating and analyzing options, salary compression issues, exemption classifications, job descriptions, compensation structures, benefit reviews, communication strategies and more.

We have created a task force committed to staying up to date on all updates and implications of the new Overtime Exemption Rules. Please feel free to reach out directly to the following team members, or contact your Warren Averett advisor directly:

Kelly Cochran
Gerriann Fagan
Lila McNair
Jeff Rowles
Carol Trotter