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HR Overtime Regulations (2017) Cheat Sheet by

resources     human     regulations     2017     overtime     hra


The U.S. Department of Labor announced in May its long-a­nti­cipated changes to overtime rules under the Fair Labor Standards Act (FLSA). For many of our clients in the security industry, this regulatory change will fundam­entally alter how businesses approach pay and overtime for their employees.

1. Salary Test

To be considered exempt, in most cases an employee must be paid on a salary basis and must receive a guaranteed salary each week. That salary cannot be reduced based on quality or quantity of work; in fact, there are very few scenarios where an exempt employee’s salary can be docked.

2. Minimum Salary Test

Effe­ctive Dec. 1, 2016, the new salary minimum will be $913/week ($47,4­76/­year). Anything below that requires that the employee be designated non-exempt and thereby paid overtime for work exceeded 40 hours per week

3. Auto-S­alary Threshold Increases

Auto­matic Salary Threshold Increases Every 3 Years (Not Annually) to Maintain Level at 40th Percentile in Lowest­-Wage Census Region
Department of Labor (DOL): reduced the frequency of the automatic increases in response to concerns raised by SHRM and others. Instead of annual increases, the threshold will be adjusted every 3 years to maintain the level at the 40th percentile of full-time salaried workers in the lowest­-wage Census region. Automa­tically updating the salary threshold, however, does not allow the government to take into account changing economic condit­ions, specific impact on certain indust­ries, or regional differ­ences. It also denies the public the ability to have input on the threshold as required by the regulatory process.

4. Highly Compen­sated Employee (HCE) Exemption

Highly Compen­sated Employee (HCE) Exemption Is Now $134,004 Per Year
The final rule retains the method­ology in the proposed rule setting the threshold at the 90th percentile of full-time salaried workers nation­ally.

5. Duties Test

A properly classified exempt employee must also pass the duties test. Not only must an exempt employee be paid a minimum salary, they also must perform special duties that make them eligible for this exemption. These are what the Department of Labor calls the “White Collar Exempt­ions.” To qualify as exempt, an employee’s primary duties have to meet the standards in one of the following catego­ries:

Exec­uti­ve: Management of the organi­zation or a custom­arily recognized department or division. This is true management — not usually a working supervisor — based on actual duties and level of bona fide, indepe­ndent management authority, and not on job title alone.
Admi­nis­tra­tive: High­-level office or non-manual work directly related to management or general operations (such as accoun­ting, IT, HR, marketing) and including the exercise of indepe­ndent judgment and decisi­on-­making discretion on matters of signif­icance.
Prof­ess­ion­al: Work requiring advanced knowledge in science or other field of learning custom­arily obtained by a prolonged course of specia­lized intell­ectual instru­ction, i.e., higher education (not vocational educat­ion). In other words, much of the knowledge required is typically learned by going to college, not on-the­-job.
Comp­uter: Design, develo­pment, creation, testing, and modifi­cation of computer systems and programs. Does not apply to help desk employees and roles involved in the manufa­cture, operation, repair, or mainte­nance of computers. Exempt computer profes­sionals may, in lieu of passing the salary test, be paid by the hour if they make at least $27.63 per hour.
Outside Sales: Making sales or obtaining orders or contracts, and work is largely performed away from the employer’s premises, i.e., cold-c­alling, identi­fying and visiting prospects, etc. Insides sales and customer service positions typically do not qualify. Bona fide outside sales profes­sionals do not have to meet the salary test.

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