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Guarantee of Overtime Pay

The US Department of Labor (DOL) has proposed rules that will guarantee overtime pay to salaried workers earning less than $50,440 annually ($970/weekly) by 2016. The old threshold was $23,660 annually ($455/weekly). To receive overtime pay, therefore, an employee has to be a salaried employee and earn less than $50,440. For most employees, the DOL has the final decision on whether they are exempt or salaried depending (a) how much they are paid, (b) how they are paid and (c) what kind of work they do. This is called the “duties test.”
Even though the duties test is not being changed, far fewer employees will be eligible to be classified as exempt. On a go-forward basis, the DOL also proposes to automatically update the salary threshold, based on inflation or a fixed percentile of earnings.
If passed, the new rules don’t become effective until March 2016. This is a good time to look at your employee population and make sure they are classified correctly. HR Compliance 101 will be happy to help with that or you can do a self-assessment and reach out to us if changes need to be made.
Ivan Smith              Gertrude Jones                    John White
Duties Test Passed?                          Yes                                Yes                                        No
Salary Test Passed?                           Yes                                No                                         No
Action Needed:                              None                      Increase salary to                Re-classify as
base of $50,440                   hourly & pay
or re-classify to                    overtime for
hourly & pay OT                  hours over 40

We included this information in our 3rd quarter newsletter, but it bears repeating. If you want to receive our newsletter with compliance alerts, Q&A, information about workshops and up-to-date advice about employee, regulatory and leadership issues, please sign up at our website,

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