New overtime rule doubles minimum salary exemption

New overtime rule doubles minimum salary exemption

The Department of Laborês new overtime rule, effective December 1, 2016, doubles the minimum salary requirement for white collar employees to be exempt from overtime. For executive, administrative and professional employees, the salary floor will rise from $23,680 per year ($455 per week) to $47,476 per year ($913 per week). The minimum for highly compensated employees to be exempt will rise from $100,000 to $134,000. (Those positions must also meet a –minimal duties” test, which has not changed.)

The salary minimums will be updated automatically every three years starting January 1, 2020. Employees who do not meet the exemptions must be paid time and a half for any hours over 40 hours a week.

Employers may count bonuses and incentives (including commissions) for up to 10 percent of the salary minimum as long as the payments are made at least quarterly. An employer may also make a –catch-up” payment at the end of each quarter.

Examples of dealership white collar employees, said NADA, are general, department and assistant managers; shop foremen; office managers and other office staff; human resources professionals; controllers; accountants; attorneys, and computer specialists.

Some dealershipsê employees are specifically exempt from overtime under the –commissioned employee” exemption –salesmen, partsmen and mechanics,” reports NADA.

The DOL under the Obama Administration has systematically tried to reverse the well-established exemption for salesmen, partsmen and mechanics, meeting with no success, thanks to substantial dealer push-back nationwide.

NADA suggests these ways among the options to comply with the new rule:

« Increase employee compensation to the new minimums by December 1.

« Pay overtime as required for employees who do not meet the minimum salary for exemption. Dealers may decide to divide one job between two or more workers.

« Increase an employeeês commission compensation to satisfy the –commissioned employee” overtime exemption.

The DOL received more than 270,000 public comments on the proposed rule after putting forward a higher salary exemption of $50,400. Some employers said the rule would force them to cut workersê hours or hire fewer full-time employees.

NADA said in a statement that it is –evaluating participation in potential litigation and Congressional oversight.” For more information, email NADA Regulatory Affairs at or call 703-821-7040.

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