The new federal overtime rule takes effect on Jan. 1 and that includes a three-part test for determining when white-collar workers are exempt or must be paid overtime for working more than 40 hours in a week.
Parts of the new rules that involve exempt staff include:
According to the National Council of Nonprofits, at issue is the provision of the federal FLSA “that exempts certain employees from the requirement that they receive time-and-a-half overtime pay for work in excess of 40 hours in a work week.” The salary threshold is one of a three-part test that must be satisfied before a person can be deemed “exempt.” Those three parts include:
The U.S. Department of Labor announced further that it intends to propose updates to the salary and compensation levels on a regular basis, to ensure that these levels provide useful tests for exemption. It declined, however, to set a regular schedule, probably every four years.
According to the National Council of Nonprofits, the Overtime Final Rule implements a 50-percent increase in the salary level test that was last set 15 years earlier, a period that saw a 33-percent increase in the federal poverty level. The Labor Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level. It also estimates that a little more than 100,000 employees will be entitled to overtime pay as a result of the increase to the HCE level.
For more on the new rules and an extensive Q&A on the topic, go to https://www.councilofnonprofits.org
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