February 24, 2020

February 24, 2020

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It’s Overtime Time! Final Rule is Here – Are You Ready?

The wait is over. The US Department of Labor has released the long-awaited Final Rule modernizing the Fair Labor Standard Act’s (FLSA) white-collar exemptions. The good news, for those who have been following the development of the Final Rule, is that there are no big surprises.

What are the changes?  

Expected to require employers to pay overtime to roughly 4.2 million additional US workers, the regulation changes include:

  • Increasing the current minimum salary requirement for the executive, administrative, professional and computer employee exemptions from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), with automatic increases every 3 years to the threshold wage level based on the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census region (currently the South);

  • Increasing the threshold for exemption as a “highly compensated employee” from $100,000 to $134,004, with automatic increases every 3 years to the threshold wage level based on the 90th percentile of weekly earnings for full-time salaried workers; and

  • Permitting up to 10% of the standard salary level to come from non-discretionary bonuses, incentive payments, and commissions paid at least quarterly.

The DOL decided not to make any changes to the duties test at this time. Employer groups strongly lobbied the DOL to not make changes to the various duties tests as any changes would have increased compliance costs.

How much time do I have?

The Final Rule goes into effect December 1, 2016, giving employers more than six months to prepare for the changes.  However, there is no time for procrastination!  The dramatic increase in the salary threshold will require most employers to make some significant changes ensure their organization is compliant.

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About this Author

Jill S. Kirila, Squire Patton Boggs, Service Provider Relationship Lawyer, Multistate Litigation Attorney

Jill Kirila represents and counsels companies in all aspects of employment and other service provider relationships. She has extensive multistate litigation experience before federal and state courts and administrative agencies and regularly defends employers against all types of discrimination and wage and hour claims, as well as executive (including ERISA) benefits and breach of contract claims.

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Meghan E. Hill Employment Attorney Squire Patton Boggs

Meghan Hill’s clients benefit from her holistic approach and ability to incorporate their goals and objectives when working to prevent and solve employment law problems. Meghan’s big-picture view allows her to understand all ramifications employers face when dealing with issues, as well as identify broader issues outside of employment. Meghan works with numerous diversified industrial companies and has a growing healthcare client base.

Meghan regularly represents companies in complex litigation and wage and hour collective and Rule 23 class actions in federal courts, including multidistrict litigation (MDL). She has extensive experience working with international companies on litigation and has handled covenant not to compete cases for clients in numerous industries and regularly defends employers against intentional tort, whistleblower, discrimination and wrongful termination claims. In addition to her litigation work, Meghan advises employers on compliance with state and federal employment and labor laws and emphasizes the importance of training as a way for companies to maintain compliance with ever-changing employment regulations. This aspect of her practice includes coaching on compliance with wage and hour regulations and payroll auditing, specifically in the healthcare and manufacturing industries. Her familiarity with hospital payroll systems allows her to provide comprehensive compliance counseling to clients in the healthcare sector. Meghan also investigates complaints of workplace discrimination, harassment and illegality, including whistleblower claims under various federal laws.

Meghan works with the firm’s corporate practitioners to guide clients with labor and employment matters arising in mergers, acquisitions, restructurings and other business transactions and counsels on appropriate employment structures to help clients avoid future liabilities. She also drafts employment and expatriate contracts and restrictive covenants for executives in a variety of industries.

In addition to her traditional employment practice, Meghan has significant experience with matters involving workplace safety, including OSHA, investigations, audits and wrongful death defense.

Meghan has been recognized numerous times in Ohio Super Lawyers – Rising Stars and has an active role in the Squire Patton Boggs Women’s Enterprise group, as well as women’s mentoring initiatives throughout Central Ohio. She is the co-author of Wages and Hours – An Employer’s Guide, published by the American Chamber of Commerce since 2011.

Prior to joining Squire Patton Boggs, Meghan served as a law clerk for the Honorable James A. Wynn Jr. of the North Carolina Court of Appeals (now, Fourth Circuit Court of Appeals) and a legal intern for Senator Michael DeWine.

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Shennan Harris Employment Lawyer Squire Patton Boggs Columbus

Shennan Harris helps employers solve – and prevent – problems through efficient, effective, personalized representation and counseling.

Shennan excels at efficiently and effectively managing all aspects of the litigation process and thinking outside the box to resolve tough problems. She represents clients in all aspects of complex litigation and arbitration, including class actions and in state and federal trial and appellate courts, as well as helps employers resolve charges of discrimination and other disputes before administrative agencies...