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Some people will because of an executive order signed by the president that says some salaried people may no longer be exempt from overtime pay starting December 1, 2016.

The new rule states that people in salaried positions must be paid a minimum weekly wage of $913 per week ($47,476 per year) in order to be exempt from any overtime pay.

For those who are not aware of this upcoming rule see the US Department of Labor fact sheet below.

The Final Rule

* Key Provisions of the Final Rule *

The Final Rule focuses primarily on updating the salary and compensation levels needed for EAP workers to be exempt. Specifically, 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, currently the South, which is $913 per week or $47,476 annually for a full-year worker;

Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004; and

Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. The Final Rule makes no changes to the duties tests.

Effective Date

The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020. (Link to the full version of the Dept. of Labor Overtime Fact Sheet)

Local Impact

Daryl Schliem - CEO Bozeman Chamber of Commerce
Daryl Schliem - CEO Bozeman Chamber of Commerce

Daryl Schliem, CEO of the Bozeman Chamber of Commerce joined Tom Egelhoff on the Morning Show Monday (Nov. 14th) and voiced his concerns about how this new ruling will affect local retail stores during the holidays.

Schliem pointed out that many local retail store managers work long hours during the holidays and this could affect the hours they maybe able to work.

He also spoke of the various tournaments that are coming to Bozeman that will put further pressure on both hotels and restaurant staffing.

Some Final Thoughts

Currently 4.2 million salaried workers are exempt from overtime pay.

In my opinion this is another ploy by our federal government to increase their tax coffers.

How can we force employers to pay employees more so we can tax their income more and make it sound like we’re doing them a favor?

So will you be out of work on December 1? You might want to ask your employer what their thoughts are about the final rule.

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