ACtion Magazine - September/October 2016 - 12
Keith Leonard,
Esquire
O
Changes to overtime pay
exemption
n May 18, 2016, the United
States Department of Labor
(the "DOL") released its final regulations revising the overtime
pay exemption. The new regulations
go into effect on December 1, 2016
and increase the salary threshold level from $455 per week to $913 per
week (or $47,476 per year for a full
year employee). Thus, under the final
regulations, a full-time salaried employee must, after December 1, 2016,
be compensated more than $913 per
week in order to be exempt from receiving overtime pay under the socalled white collar exemption (executive, administrative, professional,
outside sales, and computer employees). The regulations also set out a
process for updating the salary levels
every three years, beginning on January 1, 2020. Of course, in conjunction
with this raise in the threshold salary
level is the need for employees who
will get the benefit of overtime pay
to maintain records of the hours they
work each week, even though they are
salaried employees.
All three of the following tests
must be met before an employee satisfies the white collar exemption: (1)
The employee must be paid a predetermined and fixed salary that is
not subject to reduction because of
variations in the quality or quantity
of work performed; (2) The amount
of salary paid must meet the minimum specified amount; and (3) The
employee's job duties must primarily
involve executive, administrative, or
professional tasks as defined by the
regulations. Employers must also be
mindful that the duties of the position
are relevant for qualifying for the exemption, and not the job title assigned
to an employee. This fact is another
12
reason for job descriptions for positions set up by employers to be prepared and completed in a clear descriptive way. Too often the employer
and employee differ on what the job
duties of a particular paid position
are. The lack of a job description or
the failure of a job description to be
accurate and all-inclusive can become
problematic for both parties, and may
even result in a complaint being filed
against the employer for failure to pay
overtime compensation. For example,
for an administrative employee to be
exempt from overtime, his or her primary duties must be the performance
of office or non-manual work directly
related to the management or general
business operations of the employer
or the employer's customers and must
include the exercise of discretion and
independent judgment with respect to
matters of significance.
Another change to the prior directives contained in these final regulations is the right of employers to use
nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent of
the foregoing salary level, provided
these types of payments are made on
a quarterly or more frequent basis. It
is important to note that the payments
must be nondiscretionary. Thus, a bonus which is entirely at the discretion
of the employer (such as a holiday
bonus) cannot be used to satisfy any
portion of the $913 weekly standard
salary level.
If an employer has a 401(k) plan
in effect for its employees, the final
regulations may also impact that plan.
For example, employee eligibility for
the plan may change, if different plans
are offered for salaried and hourly
employees. The changes in exempt
ACTION * September/October 2016
(versus nonexempt) employees under
these regulations can also effect elective deferral and matching contribution amounts under the plan. An employee who benefits from increased
earning potential (due to overtime)
can elect to defer a greater percentage
of his or her earnings to the 401(k)
plan, with a corresponding effect on
the amount of matching contributions
the employer may have to make on
behalf of the employee.
The DOL says that these regulations are an incentive for employers to
hire more employees (thereby reducing unemployment) instead of having
current employees work longer hours.
However, that is not the only way employers can respond to the changes.
They can pay overtime as dictated
by the new salary ranges; raise a salary to or above the threshold to keep
employees within the exempt status;
or evaluate workload distribution to
keep employees from needing to work
overtime. As with almost all business
regulations, there is also the expense
to employers in complying with these
regulations. I would therefore like to
hear from readers about their reactions to these changes.❆
Remember that laws are constantly
changing and are often not uniform
throughout the United States. Do
not place unqualified reliance on
the information in this article.
Always contact legal counsel for
detailed advice.
If you have a particular issue,
law or problem you would like to
see addressed in a future column,
please contact me at KLeonard@
LeonardSciolla.com, or Leonard,
Sciolla, Hutchison, Leonard &
Tinari, LLP, 215-567-1530.
Table of Contents for the Digital Edition of ACtion Magazine - September/October 2016
ACtion Magazine - September/October 2016
Contents
Outlook — Andrew Fiffick
Service Port — Steve Schaeber
Leonard’s Law — Keith Leonard, Esq.
Cooling Corner
Virtual View — Angie Kilbourne
What you should know about A/C hose compatibility with R-1234yf
By The Numbers
Member Profile
CO2 air conditioning development comes alive in Germany
Industry News
Association News
New Products and Services
Last Watch — Elvis Hoffpauir
ACtion Magazine - September/October 2016
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