The NEW Federal Rule on overtime compensation
becomes effective on December 1, 2016.
Specifically the Rule:
- Sets the standard salary level at the 40th percentile of earning of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
- Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
- Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels of the above percentiles and to ensure that they continue to provide useful and effective test for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date.
Future automatic updated to those thresholds will occur every three years, beginning on January 1, 2020.
California Labor Laws are more stringent than Federal Overtime Laws.
California Labor Laws concerning overtime compensation and answers to frequently asked questions can be accessed HERE.