Well, it was a day later than expected but the Dept. of Labor (DoL) has announced the highly anticipated changes to the overtime rule. Several things were changed from the proposed rule. Some were expected and some were not. The full federal register version isn’t available yet so have not had a lot of time to look at the new rules. I’ll try to review what has been announced and what a few insiders know.
Lets start at the top. The highest paid category of exempt worker in some businesses is known as highly compensated worker. The annual salary for these workers has been raised from $100,000 to $134,400 per year. These are automatically exempted from overtime.
The more common for gins is known as the Administrative Worker exemption. These are normally middle management salaried employees. Often gins will put office managers and/or superintendents in this category. There are two tests for these workers.The first is duties (we’ve covered this in previous articles) and the second is salary. The expected salary increase in the proposed rule was over $50K per year but the final rule will be little below that. To qualify workers must be paid on a salary basis and make at least $913 per week. That equates to $47,476 per year. There are provisions for a portion to be paid by bonus but only about 10%. The $913 is just a bit more than double the current $455 per week threshold. It was anticipated that the DoL would also change some of the duties tests for these workers but they left those unchanged.
There were over 300,000 comments on the proposed rule so I fully expect there will be a LOT in the Federal Register announcement to read and comb through.
The rules take effect December 1, 2016 (right in the middle of gin season) which is significantly later than expected giving employers time to figure out the impact and lawyers time to file suits to block it.
The full Federal Register version is expected May 23. I expect we will be learning a lot more as we work through over the next couple weeks. This will be one of the topics we cover at the pre-season meetings. Watch for more coverage here as well