The U.S. Department of Labor (DOL) issued a new rule on May 18 related to overtime pay.  The new regulations include multiple provisions with potential implications for employers and employees in the long term care sector.  The new rule takes effect on December 1, 2016.

Based on its preliminary review of the new rule, AHCA/NCAL notes that the new rule:

• Increases the weekly salary threshold for exempt executive, administrative, and professional employees to $47,476 per year (or $913/week). Salaried employees earning less than this amount, regardless of job duties, must be compensated for overtime work.

• Automatically updates to the salary level for the “white collar” exemptions every three years, beginning on January 1, 2020. Each update will index the salary level for exempt employees to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage census region. At present, the DOL expects that the 2020 update will raise the salary threshold to $51,168/year ($984/week). Beginning August 1, 2019, the DOL will post the new salary levels 150 days in advance of their effective date.

• Allows up to 10% of the salary threshold for exempt executives, administrators, and professionals to be satisfied by non-discretionary bonuses, incentive pay, or commissions, provided that such payments are made on at least a quarterly basis.

• Increases the annual compensation level for the “highly-compensated employee” exemption, an amalgam of the “white collar” exemptions, from $100,000 to $134,004 (of that, at least $913/week must be paid on a salary basis). This will be updated every three years, also beginning on January 1, 2020, by indexing such compensation to the 90th percentile of income for full-time salaried workers nationally. The DOL currently expects the salary threshold for this exemption to rise to $147,524/year in 2020.

• Does not modify the duties tests associated with the “white collar” exemptions.

Additional resources about the rule can be found on the DOL Wage and Hour Division’s website and in the DOL FAQ.