On Tuesday, May 17, the Department of Labor (DOL) released the final rule regulating overtime under the Fair Labor Standard Act. While the salary standard is approximately $3,000 less than the original proposal, the rule is expected to have a significant impact on clubs, golf courses and across the community of small businesses.
What Are the Major Provisions?
- Threshold – The rule establishes the salary standard at $47,476 annually ($913 weekly) for a full-time salaried worker, which is double the existing threshold. This is approximately $3,000 less than the original proposal, and is indexed to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South.
- Primary Duties Test – The rule made no changes to the existing duties text. The existing Executive, Administrative and Professional exemptions remain intact.
- Highly Compensated Employees – The minimum threshold increased to $134,004. This number is based on the annual equivalent of the 90th percentile of full-time salaried workers nationally.
- Automatic Updates – The rule establishes the process for an automatic update of the salary threshold every three years to maintain the 40th percentile (or 90th for HCEs). The first update is slated for January 1, 2020.
- Bonuses and Commission – The rule will now allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. These amounts must be paid at least quarterly.
- Effective Date – The rule is slated to become effective and enforceable on December 1, 2016.
Congressional opposition is already mounting. Speaker Paul Ryan (R-WI) released a statement citing the rule as an “absolute disaster for our economy.”
On the day following the release of the rule, the CMAA and National Club Association delegation to National Golf Day on Wednesday, May 18, shared at multiple meetings with Congressman and Senators how this rule will adversely impact the industry and the individuals working in it.
Earlier this year in anticipation of the release of the final rules, legislation was introduced in both the House of Representatives and the Senate which would invalidate the proposed overtime rule changes. HR4773/s.2707, The Protecting Workplace Advancement and Opportunity Act, would limit the actions of the Department of Labor (DOL).
While this legislation is unlikely to become law, it sets the stage for further Congressional action to prevent the rule from becoming effective.