Department of Labor Releases Overtime Exemption Rule

Under the rule, which will take effect on December 1, 2016, employers must pay overtime to any non-exempt employee making less than $47,476 per year. The rule makes no changes to the primary duties test, counts bonuses and commissions toward the salary threshold, and includes a six-month phase-in period.

The Department of Labor (DOL) has released the final version of the Overtime Exemption Rule, which will require employers to pay overtime to any employee making less than $47,476 per year. The final rule will take effect on December 1, 2016, reported the National Club Association (NCA).

Under the current law, salaried employees making at least $455 per week ($23,660 per year) and who meet the requirements under the “primary duty” test are exempt from overtime compensation. Under DOL’s new rule, the minimum salary threshold will increase to $913 per week ($47,476 per year). The previous version had proposed a threshold increase to $970 per week ($50,440 per year), the NCA reported.

An important concession for clubs, DOL’s final rule makes no changes to the primary duties test, which may have further reduced the number of employees classified as exempt, the NCA reported.

The rule also requires the minimum salary income threshold to be increased every three years—not each year as the previous version of the rule had proposed. The threshold will adjust to meet the 40th percentile of full-time salaried workers. Based on wage projections, the threshold is expected to rise to more than $51,000 on January 1, 2020, the NCA reported.

Also important for many private clubs, employers will be able to count bonuses and commissions—including golf lesson income—toward as much as 10% of the salary threshold, the NCA reported.

The rule’s most important concession is a six-month phase-in period for its implementation, the NCA reported.

NCA is working to stop the rule before it goes into effect, by first helping to pass the Protecting Workplace Advancement and Opportunity Act and then push to defund the rule.