Federal Wage and Hour Rules Expected for 2016

Printer-friendly version

Three months after the comment period closed on the proposal from the U.S. Department of Labor (DOL) to revise the Part 541 overtime regulations, the DOL issued its 2015 Semiannual Regulatory Agenda that includes a statement on the timing for a final overtime rule. According to the regulatory agenda, the DOL expects to publish final regulations in July 2016.

The proposal, which was published in the Federal Register on July 6, 2015, provided for a 60-day comment period, which closed on September 4, 2015, with some 290,723 comments received.

The comments came from a variety of employers and trade associations, including the Employers Association of New Jersey (EANJ).

View EANJ’s Comments here

According to John Sarno, president of EANJ, the proposals represent some of the biggest revisions to the Fair Labor Standards Act in twenty years.

The revisions include:

  • setting the standard salary level required for exemption at the 40th percentile of weekly earnings for full-time salaried workers (projected to be $970 per week, or $50,440 annually, in 2016);
  • increasing the total annual compensation requirement needed to exempt highly compensated employees to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
  • establishing a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.

Experts are advising employers to start planning for the rule changes so they can be prepared for the overtime regulations.  For example, employers should evaluate strategies for exempt employees who earn less than approximately $50,000 of increasing salaries to exceed the new salary threshold, modifying their job responsibilities, or reclassifying them as nonexempt.

Sarno says that he has been hearing from members who are worried about the changes, particularly nonprofit organizations.

“The final rule will impact employers’ budgets and some are considering the impact of increased for employees who remain exempt at a higher salary level or are reclassified as non-exempt, ” he says.

The USDOL reports that most overtime and misclassification violations occur in the restaurant and retail industries.