August 15, 2016
Department of Labor Overtime Regulations Effective December 1, 2016
On May 18, 2016 President Obama and Labor Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protection to over 4 million workers within the first year of implementation. The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek, at a rate not less than one and half their regular rates of pay.
Any worker making $47,476 or less must be paid overtime for hours worked in excess of 40 hours in a given week. This is true whether the employee receives a salary or hourly pay. The overtime rate must be at least one and half their regular rates of pay.
COMP time can not be used to satisfy overtime obligations of covered employees. If an employee qualifies for overtime, overtime must be paid.
Highly compensated employees (HCE) are now defined as $134,004 or higher. The previous rate was $100,000.
Up to 10% of the compensation amount can be in the form of nondiscretionary bonuses or incentives.
The new rule is effective December 1, 2016
The wage amount will automatically update every three years, next update will be January 1, 2020.
Actual implementation documentation has not been published yet. Final regulations could still change slightly.
For all WFS payroll clients, please account for these adjustments on your data entry worksheets starting December 1, 2016. If we do not process your payroll, please make the necessary adjustments. Please call our office if you have any questions about the minimum wage rate increase or need help with any other accounting matters.
Walker, Fluke & Sheldon, PLC