New Overtime Regulations and Employee Wellness Programs to Take Effect

New regulations issued by the U.S. Department of Labor taking effect December 1, 2016 will significantly expand the number of employees who must receive overtime pay. The regulations more than double the minimum salary that must be paid to employees to qualify for an exemption from the requirement that 150% of regular wages be paid for each hour worked over forty hours.

Under the current regulations, for an employee to be exempt from overtime requirements, the employee must be paid a regular salary of $455 per week ($23,660 annually), and perform primarily executive, administrative or professional duties. The new minimum salary to qualify for the exemption is $913 per week ($47,476 annually). The regulations also require the Secretary of Labor to update the minimum salary every three years starting January 1, 2020 to reflect inflation.

The new regulations allow employers to satisfy 10% of the minimum salary through non-discretionary bonuses or commissions.

The exemption requirements about the duties of the employee remain unchanged. These require that the employee either perform executive, administrative or professional duties. Each term is defined separately. To qualify as an executive, the employee’s primary duties must be managing some portion of a business with supervisory authority over at least two full-time employees, and must at least have significant input in decisions about terms of employment for the employees under his or her supervision. To qualify as an administrative employee, the employee’s primary duties must be the performance of non-manual office labor related to the management or general operations of the business, and the employee must be able to exercise discretion or judgment in matters of significance to the business. To qualify as a professional, the employee must be engaged in work requiring professional education and knowledge such as accountants, attorneys, doctors, or artists.

Employers relying on the exemption to not pay overtime should review their employees’ hours and salaries to determine if any changes need to be made prior to December 1, 2016 to comply with the new regulations. The attorneys at Plager, Krug, Bauer & Rudolph, Ltd. are available to assist in developing strategies to comply with the new regulations.

The Equal Employment Opportunity Commission also issued new regulations limiting employee wellness programs. The new regulations require that participation in any program be reasonably designed to promote health or prevent disease, and not an effort to evade anti-discrimination laws or to shift costs to employees.

The wellness programs must be voluntary and provide reasonable accommodation for employees with disabilities so they may participate. An employee may not be denied access to any health insurance benefits if he declines to participate. Incentives for participation are limited to 30% of the cost of employee-only insurance coverage. The regulations take effect January 1, 2017