Changes in federal overtime rule effective Dec. 1

Changes in federal overtime rule effective Dec. 1

The U.S. Department of Labor has revised its –white collar” overtime exemption rules, effective December 1. WANADA staff recently sat in on a webinar on the new rule, hosted by NADA chief regulatory counsel Doug Greenhaus, and offers a recap here. NADA and several other employer trade groups have challenged the rule in federal court. But until the court makes a decision, dealers should plan to comply with the new rule starting in December.

The new rule adjusts salary thresholds but makes no changes to job duties tests. For most white collar employees, the salary threshold for exemption from overtime pay will more than double, from $455/week ($23,660/year) to $913/week ($47,476/year). The new salary thresholds will automatically increase every three years starting in 2020.

Until December 1, bonuses and incentive pay do not count. After December 1, up to 10 percent of the salary threshold may be satisfied by nondiscretionary bonuses, incentive pay or commissions, if paid at least quarterly. Catchup payments are allowed in the first pay period of the following quarter.

Job duties tests, though they will not change, are detailed for each job category (executive employees, administrative employees, –learned” professionals such as in-house attorneys and accountants, computer professionals, outside sales and highly compensated employees).

To ensure compliance with the new rule, NADA recommends that each dealer carefully review how and how much white collar employees are paid. Dealers may decide to revise their pay plans in any combination of three ways:

« Increase salaries to new thresholds;

« Reduce or eliminate overtime where possible, or divide jobs between two or more employees;

« Increase commission compensation to satisfy –commissioned employee” exemption.

More information is available in NADAês new guide, A Dealer Guide to Federal Wage and Hour, Child Labor, and Wage Discrimination Compliance. The guide is included with NADA/ATD membership and is $129 for nonmembers. To obtain a copy, click here or call 800-557-6232.

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