After months of waiting and speculation, the White House later today will release a new rule that could make more than four million Americans eligible for overtime pay. The rule will become effective in December, and will do the following:
- Immediately double the minimum salary threshold for most white collar exempt classifications to $47,476 per year ($913 per week)
- Adjust the minimum salary threshold for most white collar exempt classifications for inflation every three years
- Change the way that the minimum salary is calculated so that employers can count bonuses and commissions toward as much as 10 percent of the salary threshold
Although the changes in the new rule are significant, many employers will be very relieved to learn that the White House decided not to make changes to the duties tests for the white collar exemptions at this time. Some observers, however, believe that changes to the duties tests are inevitable, and that the timing of those changes will depend largely on the outcome of the election in November.
A copy of the new rule, along with a summary from the White House of the basis for the rule, can be found here.
Employers should begin reviewing their exempt classifications and salary structures to prepare for the December effective date of the new rule. If you have questions about the rule or implementation strategies, contact a member of the Frantz Ward Labor and Employment Practice Group.