Overtime Regulations effective December 1, 2016

If you need assistance with determining how the new overtime regulations effective December 1, 2016 affects your payroll please contact Cindy Bates. The following are the highlights:

  1. Employees making less than $47,476 must be paid time and a half for overtime hours.
  2. A “white collar exemption” from the overtime requirement may be claimed for employees that make more than $47,476 if the “standard duties test” is met as follows:

Executive Exemption –the primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise. Additionally, the employee must customarily and regularly direct the work of at least two other full-time employees or their equivalent (for example, one full-time and two half-time employees are equivalent to two full-time employees), and have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.

Administrative Exemption – primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers. Additionally, the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

Professional Exemption- “learned professionals,”  “creative professionals,” teachers, and employees practicing law or medicine. Under the Final Rule, exempt professional must primarily perform work that either requires advanced knowledge in a field of science or learning, usually obtained through a degree, or that requires invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

Specifically, the salary level and salary basis requirements do not apply to teachers, lawyers, or doctors (“bona fide practitioners of law or medicine”).

  1. Highly compensated employees, making more than $134,000, no matter what duties are performed, are also exempt.
  2. Comp time has also been eliminated except for certain government positions.

I do have more detailed information I can forward you by e-mail.

Cynthia A. Bates, CPA