“In May, the Department of Labor (“DOL”) announced its final rule to increase the minimum salary for white collar exemptions. With little more than two months to go before that new rule takes effect on December 1, 2016, employers still have time to decide how to address those otherwise exempt employees whose current salaries would not satisfy the new rule by either increasing their salaries or converting them to non-exempt status.
But some of those decisions may not be easy ones. And they may create some unexpected challenges, both financially and operationally.
New Salary Thresholds
Effective December 1, 2016, the salary threshold for the executive, administrative, and professional exemption will effectively double, increasing from $23,660 ($455 per week) to $47,476 ($913 per week).
The total annual compensation requirement for “highly compensated employees” subject to a minimal duties test will also increase from $100,000 to $134,004. The salary basis test will be amended to allow employers to use non-discretionary bonuses and incentive payments, such as commissions, to satisfy up to 10 percent of the salary threshold.”
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Michael S. Kun is a member of the Employment, Labor & Workforce Management practice, in Epstein Becker & Green, P.C.’s Los Angeles office. He is the national Chairperson of the firm's Wage and Hour practice group. Mr. Kun represents clients in such diverse industries as hospitality, health care, logistics, housing, and staffing services.
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