Executive Summary
Overview: Multiple sources have reported that the US Department of Labor recently sent the proposed overtime rule to the Office of Management and Budget (OMB) for its mandatory review. If OMB’s review is completed on an expedited basis, DOL could disseminate the proposed final rule to the public as early as mid-April, with an effective date potentially as early as the beginning of June. It is also possible that Congress could attempt to delay the effective date. While the actual release date and the corresponding effective date for the regulations are unknown, most experts agree that the effective date will likely be 60 days from the release date.
An accelerated timetable may be motivated by political pressures related to the upcoming election and potential changes in the White House and Congress. For more information on what we have done and what we plan to do to help clients prepare for the new regulations please review the details below.
The Details
The Regulations
As we previously reported, the proposed regulations seek to increase the salary basis threshold for the white-collar exemptions (those exemptions which require payment on a salary or fee basis) from $455 a week (or $23,660 a year) to $921 a week ($47,892 a year), which the DOL expects to revise to $970 a week ($50,440 a year) when it issues its Final Rule.
Related changes in the regulations include increasing the annual compensation threshold for exempt highly compensated employees from the present level of $100,000 to a proposed $122,148, as well as raising the exemption threshold for the motion picture producing industry from the present $695 a week to a proposed $1,404 a week for employees compensated on a day-rate basis.
The DOL is also considering, a wide range of other topics, including:
- Whether to allow nondiscretionary bonuses to satisfy some portion of the required salary level (the DOL suggests up to 10 percent), including the appropriate frequency of such bonuses (the DOL suggests not less than monthly);
- Whether to allow commissions to satisfy some portion of the required salary level;
- Whether to modify the current duties tests for exempt status, including the “primary duty” standard, by such means as:
· The best way to determine annual updates to the salary levels in the regulations.
Prepare Now with On Demand Tools and Resources
As we previously announced, clients who were unable to attend our webcast titled: “Proposed Changes to Federal Overtime Exemptions: Are you ready?” can now access it on demand by clicking here.
Click "register" and then click ″launch presentation" if needed to start the webcast. The session will start automatically and audio will be available through your computer so please check to ensure it is enabled.
A copy of the presentation and a readiness toolkit is available for download after launching the webcast by clicking these items in the Resource list on the left side of your screen.
Next Steps
We are committed to helping our clients comply with the final regulations and will continue to monitor the regulatory progress and update clients as appropriate. In the coming months we will also be updating and adding additional resources and tools to help ensure clients are able to navigate the new regulations when they are finalized.
As always, please contact your Human Resources Business partner if you have any questions.
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This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.
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