HR News Alert–The U.S. Department of Labor has released the final rule. 



Changes Effective December 1, 2016

The U.S. Department of Labor (DOL) has released a final rule, effective December 1, 2016, to update the regulations governing which executive, administrative, and professional employees (referred to as "EAP" or "white collar" workers) are entitled to the federal Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay protections.

Current Rules
The FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, and professional employees (among others). The current regulations implementing the exemption have generally required each of three tests to be met for the exemption to apply:

  1. The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the "salary basis test");
  2. The amount of salary paid must meet a minimum specified amount, the current level for which is not less than $455 per week, or $23,660 per year (the "salary level test"); and
  3. The employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the "duties test").

"Highly-compensated employees" (HCEs) who are paid total annual compensation of $100,000 or more and meet certain other conditions are also deemed exempt.

Note: Job titles never determine exempt status. Receiving a particular salary, alone, does not indicate that an employee is exempt. Rather, in order for a white collar exemption to apply, an employee's specific job duties and earnings must meet all of the applicable requirements provided in the regulations.

Key Changes
comparison table of the current regulations, proposed rule, and final rule has been provided by the DOL. Among other things, the final rule:

  • Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (rather than on national data as originally proposed), resulting in a salary level of $913 per week or $47,476 annually for a full-year worker;
  • Sets the HCE total annual compensation level equal to the 90th percentile of earnings of full-time salaried workers nationally, consistent with the DOL's original proposal ($134,004 annually);
  • Establishes a mechanism for automatically updating the salary and compensation levels every 3 years, beginning on January 1, 2020 (rather than annual updates as originally proposed); and
  • Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as employers pay those amounts on a quarterly or more frequent basis.

The DOL is not making any changes to the current duties tests. For more information, please refer to the DOL's website on the final rule, which offers employers comprehensive resources including fact sheets, Q&As, guidance for businesses, and more.

Our section on the Fair Labor Standards Act features additional information on exemptions from the law's minimum wage and overtime requirements.



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Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a 'covered opinion' or other written tax advice and should not be relied upon for any purpose other than its intended purpose.

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Posted by Rowland and Scott LLC May 18, 2016

Occupational Safety and Health Administration (OSHA) 



    The majority of U.S. private sector businesses and their employees must meet OSHA safety and health requirements. Small businesses with fewer than 10 employees are partially exempt, meaning they are not required to maintain OSHA injury and illness records unless informed otherwise in writing by OSHA or the U.S. Bureau of Labor Statistics.

    Exclusion from the scope of OSHA requirements are:

    1. Public sector employees, such as those employed by state and local governments;

    2. Self-employed individuals;

    3. Family farms/ranches that do not have outside employees; and

    4. Workers at facilities regulated by other federal agencies.

        All U.S. employers must provide a safe and healthy place to work. There are four basic elements to all effective safety and health programs:

        1. Management Commitment and Employee Involvement. The manager or management team leads the way, by setting policy, assigning and supporting responsibility, setting an example and involving employees.

        2. Worksite Analysis. The worksite must continually be analyzed to identify all existing and potential hazards.

        3. Hazard Prevention and Control. Methods to prevent or control existing or potential hazards are put in place and maintained.

        4. Training for Employees, Supervisors and Managers. Managers, supervisors and employees are trained to understand and deal with worksite hazards.

          Rowland & Scott is available to assist employers with OSHA compliance including but not limited to preparation of Emergency Plans, Fire Safety Plans, Hazardous Materials reviews, First Aid requirements/training and Recordkeeping and Posting requirements.  Feel free to call us at 281/825-5595 or [email protected]

          Posted by Rowland and Scott LLC May 18, 2016

          Millions of Employees Will Be Affected By The Upcoming Overtime Changes 


          The impact of the anticipated Dept. of Labor (DOL) new rule is far reaching and will be very significant. The vast majority of employers that fall under the Fair Labor Standards Act (FLSA) should anticipate reviewing employee overtime eligibility classifications (Exempt versus Non-Exempt) as soon as possible after the rule is published.

          The Threshold Salary Level will increase. Presently, to qualify as exempt from the FLSA, employees must make more than $455 a week or $23,660 a year. The DOL has proposed that the threshold increase to as high as the 40th percentile of weekly earnings for full-time salaried workers, which is more than a 100 percent increase and resulting in a doubling the salary test from the current level.

          It is anticipated the DOL Rule will periodically and automatically raise the salary level. The Rule will in all likelihood provide for automatic increases in the salary level (including for highly compensated employees) on an annual basis, either based on percentiles of earnings for full-time salaried employees or based on changes in inflation.

          The Rule will adjust the Highly Compensated Employee (HCE) exemption upwards. DOL’s proposal is to set the HCE annual compensation level equal to the 90th percentile of earnings, which is $122,148 a year in 2016, and adjusted annually for inflation. Currently, in order to qualify for this exemption, an employee must earn at least $100,000/year.

          Workplace Flexibility May Be Reduced. The proposed Rule will require employers to reclassify a significant number of employees from exempt to nonexempt status. Employers must review the need to track hours worked and the resulting impact on workplace flexibility such as telecommuting.

          It is never too late to voice your opposition – We recommend all employers contact their U.S. Representative and U.S. Senators and request their support for the various Bills pending in Congress that will nullify the new Overtime Rule.

          Rowland & Scott is available to assist employers with assessing the impact of the Rule and compliance once it is published.

          Call us at +1 281-825-5595 or email us at [email protected]

          Posted by Rowland and Scott LLC May 15, 2016 Categories: New Rules Overtime