Exempt vs. Non-exempt: Overtime exemption changes that will impact you
On May 18th the Department of Labor ruled on the final rule updating the overtime regulation which extended overtime pay to over 4 million workers with a direct cost to employers of almost $1.5 Billion. This change is one of the largest the department has made in over a decade.
Although the rule does not go into effect until December 1, 2016 many businesses including dealerships, are concerned with what the impacts they will soon face. Employers in every state will need to review the exempt status of all employees and KPA will be helping clients by coming out with multiple tools to help guide businesses through the new rules. Let’s review some key provisions of the final rule:
- Salary Threshold - The weekly salary level to determine exempt vs. non-exempt status has increased from $455 to $913 per week.
- Automatic Updates – The salary threshold will automatically update every three years beginning January 1, 2020 estimated to be $51,168.
- Duties Test – The final rule has made no changes to the duties test
- Bonuses, incentive payments, and commissions – For employers the inclusion of non-discretionary bonuses and incentive payments (including commissions) can be used to satisfy up to 10 percent of the salary basis requirement.
The next steps employers make are crucial. KPA will be debuting tools to help guide and make sure your business maintains compliance. One of tools includes the new Classification Wizard, which will ask a series of questions to help easily determine if an employee is exempt or non-exempt from overtime. To view a demonstration, register here for the educational webinar that will take place on Wednesday, June 15th. For more information please email [email protected]