Delaware Restaurateur, Quarter 2 2016

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14 Quarter 2
New Overtime Rule Increases
Minimum Salary Level by Over 100 Percent
Catherine E. Waters, Saul Ewing LLP
On May 18, 2016, the
Department of Labor (DOL)
unveiled its long-awaited
overtime regulations. In its
first increase since 2004, the minimum
salary level for exemption from overtime
has been increased by just over 100 percent,
from $455 per week ($23,660 annually)
to $913 per week ($47,436 annually).
The salary level for Highly Compensated
Employees (HCEs) has also been increased,
from $100,000 to $134,004 annually.
The new “standard” salary level is indexed
to the 40th percentile of weekly earnings
for full-time salaried workers in the
lowest wage Census Region in the United
States, that is, the South Census Region.
The new HCE total annual compensation
level is indexed to the 90th percentile of
earnings of full-time salaried workers
nationwide. These levels will be updated
every three years, with the first update
taking effect on January 1, 2020.
The regulations also amend the salary
basis test, permitting employers to count
nondiscretionary bonuses and incentive
payments, including commissions, towards
up to 10 percent of the new salary level;
however, this does not apply to HCEs.
These changes will have the greatest
impact on industries with substantial
numbers of low-paid managers (eg.,
retail, production, service), but most
employers and virtually all industries
will be affected. The new rule is effective
December 1, 2016, giving employers
several months to prepare.
Although the new regulations do not
modify the standard duties tests for the
white collar exemptions, potential future
revisions could impact employees who
meet the salary level tests but who do not
otherwise meet the standard duties tests,
making them eligible for minimum wage
and overtime protections after all.
Watch for our supplemental alert for more
comprehensive information on the new
regulations and what employers should
be doing now to ensure compliance by
December 1, 2016 in a manner that is
most effective for their organizations. For
more information on what the regulations
mean for your business, please contact
the author or the attorney at the firm with
whom you are regularly in contact.
This Alert was written by Catherine E. Walters,
a member of the firm’s Labor and Employment
Practice. Catherine can be reached at
717.257.7569 or This
publication has been prepared by the Labor and
Employment Practice for information purposes only.
The provision and receipt of the information in
this publication (a) should not be considered
legal advice, (b) does not create a lawyer-client
relationship, and (c) should not be acted on without
seeking professional counsel who have been
informed of the specific facts. Under the rules
of certain jurisdictions, this communication may
constitute “Attorney Advertising.”
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