The day before the final rules extending overtime protections to 4.2 million workers were released, the White House provided its state-by-state and demographic breakdowns of the workers that as of December 1, 2016, will no longer qualify as exempt employees. It is not surprising that Florida was identified as one of the top three states, behind California and Texas, in terms of the percentage of total workers that are anticipated to be affected by the new rules. By percentage, the largest impact of the new rules will be on workers between the ages of 25-34, and those workers that have a bachelor’s degree. When considering not only those that have attained a bachelor’s degree, but also those that have some college, or an associate/occupational degree, that group will constitute 67.8% of the total affected workers. Employers are encouraged to consult with legal counsel to discuss options and strategies for ensuring compliance with this new regulation.
For additional information on state-specific impacts, see: https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/OT_state_by_state_fact_sheet_final_rule_v3.pdf
On May 18, 2016, the Department of Labor raised the minimum salary level that certain employees must be paid to qualify as exempt from the overtime pay requirements of the Fair Labor Standards Act. Under current regulations, executives (supervisors), administrative employees and professionals, must both perform “exempt” duties as defined by the DOL and be paid a guaranteed salary of at least $455 a week ($23,660 annually). This new regulation significantly increases the salary threshold to $933 a week ($47,476 annually), however, it does not alter the primary duty test. The federal government predicts that the new rule will result in companies having to pay an additional 4.2 million employees overtime, boosting wages for workers by $12 billion over the next ten years.
Additionally, as noted in comments included in a recent Law360 article, the DOL’s rule, while potentially extending overtime protections to 4.2 million more employees, may also have adverse effects for certain employees. In an effort to offset costs businesses may incur as a result of the new rule, both in terms of the expense associated with ensuring compliance, as well as having to pay overtime to formerly exempt employees or sufficiently increasing an employee’s salary so as to maintain the exemption, certain employers may reduce rates of pay, cut back scheduled hours to reduce risk of overtime, or offer less generous benefits to non-exempt employees.
A link to the new rule can be found here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-11754.pdf
Related guidance issued by the DOL can be found here: https://www.dol.gov/sites/default/files/overtime-overview.pdf
Lindsey L. Dunn