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New OT exemption rules delayed to late 2016

December 4, 2015
The good news: The U.S. Department of Labor has delayed the implementation date for changes to the so-called "white collar" exemptions to qualify for overtime pay. The DOL now reports that rules on the matter are unlikely to be finalized until late 2016.
The bad news: Employers may not have much time to comply once the final rules are issued.
With the presidential election in November 2016, it is fair to assume that the DOL will want any final regulations to take effect before a new chief executive takes office, particularly if the winning candidate is a Republican. So if the final rules are not issued until "late 2016," as the DOL has stated, employers may have only a month or two to comply.
The Fair Labor Standards Act generally requires employers to pay their workers overtime — at least one and one-half times their "regular rate" of pay for every hour they work in excess of 40 hours in a particular workweek. But certain groups of employees can be exempted from the overtime pay requirements.
One such exemption, and by far the most commonly used, relates to employees working in jobs that the FLSA describes as executive, administrative, or professional — the so-called "white collar" exemptions. In order for employees to fall within one of the white collar exemptions, they must satisfy two tests: (1) They must perform executive, administrative or professional duties that are further defined in the regulations; and (2) they must be paid a minimum compensation level. The key change being made by the proposed regulations is to raise the minimum compensation level, meaning that fewer workers would qualify for the exemption and more would have to be paid the required time-and-one-half for all overtime hours worked in a workweek. 
The current salary threshold to be exempt from overtime pay is $455 a week or $23,660 annually. The DOL has proposed updating those thresholds to about $970 a week, or $50,440 annually, with an automatic increase thereafter that is based on certain cost of living data. These changes are one piece of President Obama’s focus on raising the income level of the middle class.
Dealers are encouraged to act early to evaluate the potential impact of these changes on their business. To assist member dealers in this process, the CATA will be sponsoring a training session in early 2016 to provide more information regarding these proposed regulations. The training will be conducted by CATA Employee Relations Counsel Dave Radelet and his colleagues at Franczek Radelet P.C. 
More information regarding the training session will be provided in the near future. In the meantime, any questions regarding the proposed regulations or any related matter can be directed to Radelet at (312) 786-6190 or dpr@franczek.com.
 
 

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