The United States Department of Labor recently issued its final regulations revising the overtime pay exemptions for employees.

Beginning December 1, 2016, any employee paid less than $913.00 per week ($47,476 per year) will not qualify for the executive, administrative, or professional overtime exemptions regardless of their job duties and level of responsibility. Employees making less than the new threshold must be paid overtime compensation for every hour they work over 40 in each workweek. The DOL estimates 4.2 million additional employees will become eligible for overtime pay because of this change.

Non-discretionary bonuses, incentive pay, and commissions can be counted toward up to 10% of the $913.00 threshold, as long as those payments are made on at least a quarterly basis.  Additionally, as of December 1, 2016, the threshold for employees covered by the “highly compensated employee” exemption will increase from $100,000 per year to $134,004. The regulations also provide that these salary thresholds will be updated every three years.

Given the new salary level required to get an exemption from overtime, employers must determine how to address workers who are currently classified as exempt employees but make less than $47,476 per year. This change is crucial because employers who fail to pay employees overtime to which they are entitled are subject to mandatory treble damages, attorneys’ fees, and interest under the Massachusetts Wage Act. Employers should take action immediately to prepare for this change, including updating your exemption classifications and developing strategies to limit overtime exposure.

The lawyers in Cohen Kinne’s employment group regularly advise clients regarding federal and state overtime laws and regulations.  If you are interested in discussing an employment related issue, please contact us.