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@, 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
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