On May 18, 2016, the Department of Labor (“Department”) announced it will publish a Final Rule updating regulations related to overtime compensation and exemption provisions for executive, administrative and professional employees, as well as for Highly Compensated Employees under the Fair Labor Standards Act (“FLSA”). The Final Rule will be effective as of December 1, 2016. A pre-publication copy of the Final Rule may be found here.
The FLSA sets minimum wage and overtime requirements for employees. Certain employees are exempt from these requirements, including those “employed in a bona fide executive, administrative, or professional capacity… .” These exemptions are often referred to as the “white collar exemptions.” Once the Final Rule is effective, the exempt salary level will be $913 per week ($47,476 annually).
The Final Rule also adjusts the annual compensation level for the exemption for Highly Compensated Employees. Once the final rule is in effect, the total compensation threshold for a Highly Compensated Employee will be $134,004 annually.
In addition, the Final Rule amends the salary basis test to allow employers to count incentive payments (including commissions) and non-discretionary bonuses to satisfy up to 10% of the new salary threshold.
The changes may impact loan originator compensation agreements as well as the way you classify and pay your non-loan originator employees.
Please feel free to contact us with any questions, or for assistance with implementing these changes. As always, thank you for allowing us to assist with your legal needs.
Terry Franzen
tfranzen@franzen-salzano.com
770-248-2882