The Department of Labor recently issued final Fair Labor Standards Act regulations, which substantially increase the minimum salary an employee must be paid to qualify for most overtime exemptions. Under the new regulations, most employees making less than $47,476 per year ($913 per week) must be treated as non-exempt and are, therefore, eligible for overtime pay. These regulations take effect on December 1, 2016, so employers should be aware of these new requirements now and prepare to make necessary changes before the effective date.
For California employers, the new federal threshold for exempt status will, for the first time, be higher than the California threshold. This represents a major change for California employers, who in the past have been able to assume that compliance with the California minimum would assure compliance with the federal minimum. California employers will now be required to separately track the federal minimums, which will increase every three years.
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