Employers Must Be Ready for December 1; There Is No Choice

November 10, 2016

The United States Department of Labor (DOL) Final Regulations, changing the minimum salary requirements for exempt salaried executive, administrative, professional, and computer employees, go into effect on December 1, 2016. December 1 is the deadline. There is no grace period.

This is the first change in DOL Regulations since 2004 when the minimum exempt salary requirement went from $250 per week to the current $455 per week. The goal of these Final Regulations is to allow more employees who are currently exempt (no overtime) to be paid overtime (1½ time for all hours over 40 worked in a workweek) and raising the pay of many employees the employer wishes to maintain as exempt.  

Employees must still meet the existing “duties” test applicable to an executive, administrative, professional, or computer employees. Under the Final Regulations, beginning on December 1, the minimum amount an employer must pay an exempt salaried employee increases:

  • To $913 per week (annually $47,476) for exempt executive, administrative, and professional employees.
  • To $134,004 per year for highly compensated employees, which also must include at least $913 per week paid on a salary or fee basis as defined by the DOL Regulations.  
  • To $913 per week (annually $47,476) for highly skilled exempt computer employees.  These highly skilled computer employees may also be exempt if paid hourly at a minimum of $27.63 per hour (annually $57,470.40), which is unchanged from the current Regulations.  

No changes were made to the outside salesperson category.    

The new minimum salary amounts are just the tip of the proverbial iceberg. Employers will be forced to make tough payroll decisions regarding who will remain exempt and how to compensate the newly non-exempt employees. What action should be taken with employees who are under the new minimum levels?  What pay programs are available for current exempt employees who will not receive increases to the new minimum salary? Employers attending the Chamber webinar, “Exempt or Not Exempt? New FLSA Overtime Regs Take Effect December 1,” will learn how to prepare for December 1 and beyond.  

Contributed by Don Scharg, Attorney, Bodman Law Firm.

View the on-demand webinar “Exempt or Not?: New FLSA Overtime Regs Take Effect Dec 1” with Don Scharg.