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Overtime Rules Are Changing; Will Your Company Be Affected?

overtime.jpgEarlier this year, the Department of Labor (DOL) enacted a new rule that will have a major impact on overtime policies for many companies. The rule, which is set to go into effect on December, 1st, 2016, is estimated to cover as many as four million workers across the nation. Employees working in many different positions will be affected, including executives, administrative workers, sales staff and technology support professionals. All California business owners and managers need to be ready for these updated overtime regulations. Your company must be in full compliance with state and federal labor law at all times.

Three Key Impacts of the New DOL Overtimes Rules

1. Minimum Exempted Salary Is Increasing to $47,476 Per Year

The primary update in the overtime rules is a dramatic increase in the federal overtime salary exemption threshold. Under the previous federal rules, an employee could be eligible for an overtime exemption if they earned at least $23,660 per year. In the California, state regulations shifted that minimum level out to $41,600 per year. However, beginning on December 1st, 2016, the threshold in California and around the country will rise to $47,476 per year. This means that an employee must make at least that much annually or otherwise they cannot be exempted from the overtime rules set forth by the Fair Labor Standards Act (FLSA).

2. Non-Discretionary Bonuses and Incentive Payments

Under the new set of overtime rules, employers may now use non-discretionary bonuses and incentive payments to satisfy a portion of the minimum salary threshold. This can also include commission payments. Though, these productivity-based bonus payments can only count for up to 10 percent of the required minimum salary. Additionally, these payments must be paid at least once per quarter. Bonuses that are only paid on a yearly basis will not qualify towards the minimum salary threshold.

3. Automatic Updates

Finally, it is also important to note that the minimum overtime salary threshold is now scheduled to automatically update once every three years. Previously, the salary threshold did not update on an automatic basis. In fact, the current threshold has held steady since 2004. The DOL determined that this is far too long of a time period without updates. Now, every three years, the minimum salary threshold will adjust to reflect the economic conditions of the time. The next adjustment is scheduled to go into effect on January 1st, 2020. The DOL has promised that it will publish the details of the adjustment at least 150 days before any official changes are made.

Does Your Business Need Legal Assistance?

The skilled San Jose business law attorneys at Diemer, Whitman & Cardosi, LLP can help. If you have any questions about the DOL's updated overtime regulations or any other employment law issues, please contact our team today to set up your free initial consultation. We proudly represent businesses throughout the Bay Area, including in San Francisco and Oakland.



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