IAR Recyclers Newspress May / June 2016

Recyclers News Press

Page 17

New Employee Overtime Pay Rules

Effective December 1, 2016

salary level and highly compensated employees

(HCE) total annual compensation, from $100,000 to

$134,004 per year, will be effective on that date. Fu-

ture automatic updates to those thresholds will occur

every three years, beginning on January 1, 2020.

According to the DOL, this will raise Americans’ wag-

es by an estimated $12 billion over the next 10 years,

with an average increase of $1.2 billion annual-

ly. Additionally, the DOL states that this change will

extend overtime protections to 4.2 million additional

workers who are not currently eligible for overtime

under federal law.

No changes to the “duties tests.”

Therefore, em-

ployers will follow the duties tests that they have

been familiar with since 2004.

What are the duties tests?

Since 1940, the Depart-

ment’s regulations have generally required each of

three tests to be met for one of the FLSA’s white col-

lar exemptions to apply: (1) the employee must be

paid a predetermined and fixed salary that is not sub-

ject to reduction because of variations in the quality

or quantity of work performed; (2) the amount of sala-

ry paid must meet a minimum specified amount; and

(3) the employee’s job duties must primarily involve

executive, administrative, or professional duties as

defined by the regulations.

Increases to the salary threshold every 3 years

going forward.

The DOL will automatically update

the standard salary and compensation levels every 3

years going forward. This will be easier on employers

than the originally proposed annual updates. The

DOL has set the salary level at the 40th percentile of

full-time salaried workers in the lowest income region

in the country, which is currently the South. The DOL

states that based on projections of wage growth, the

threshold should rise to over $51,000 by January 1,

2020, which will be the date of the first increase.

References: