Page 36 - ATR 3 2016 web

Highlights, Traps and

Silver Linings

New overtime regulations and how to prepare

By Stuart Jackson
and John Davis
Guest Writers THOUSANDS OF PREVIOUSLY SALARIED-EXEMPT
EMPLOYEES IN ARKANSAS WILL SEE THEIR POSITIONS
On May 18, 2016, the Department TURNED INTO OVERTIME-ELIGIBLE POSITIONS, SO
of Labor published the final rule updat-
ing the overtime regulations under the MAKING THE CHANGE NOW GIVES YOU SOME COVER.
Fair Labor Standards Act, which requires
payment of a minimum wage and
overtime for hours worked over forty
(40) in a week unless a specific exemp- 2. The “highly compensated employee” for all time worked. Paying a driver the
tion applies. The Department of Labor exemption level jumps from minimum wage just for driving time is
estimates that over 50,000 employees $100,000 per year to $134,004 per not going to be enough given the other
in the state of Arkansas alone will be year. things drivers do.
impacted by the changes to the over-
time regulations. Here is our take on 3. The Department of Labor’s new TRAPS TO AVOID WHEN
the changes made, the traps to avoid, a overtime rule does allow the inclu- MAKING THE TRANSITION
silver lining and how to prepare. sion of bonuses when determining AND A SILVER LINING
an employee’s total pay for purposes One of the main questions we’ve
KEY PROVISIONS OF THE NEW of the administrative, professional received is this — can an employer get
OVERTIME REGULATIONS and executive exemptions. Non- around the new overtime rules by treat-
The main thing we’ve all been wait- discretionary bonuses, incentive pay- ing employees as independent contrac-
ing for is the new salary level for the ments (possibly tied to productivity tors? The answer is an emphatic “no,”
administrative, professional, executive or profitability) and commissions unless you want to get in trouble with
1
and computer employee exemptions. paid on a quarterly or more frequent various government agencies, including
The new regulations set the level at basis can account for up to 10 per- the Department of Labor (which has a
$913 a week, or $47,476 per year. That cent of the required salary level. multi-factor test to determine if a per-
is a significant increase of $458 per Employers are also allowed to make son is an employee or an independent
week, and that is the new “reality” a “catch-up” payment in any given contractor) and the Internal Revenue
for employers that will take effect on quarter to ensure an employee’s Service.
December 1, 2016. salary level in fact reaches the new Another potential “trap” we see –
Other changes include minimum level. trying to limit your new, non-exempt
There are no changes being made to employees to just forty hours of work
1. The salary levels will be adjusted the Motor Carrier Exemption. However, per week. Chances are your previously
every three years (instead of every the Motor Carrier Exemption only exempt employees were working more
year as originally proposed) begin- applies to the payment of overtime. You than forty hours per week. Following
ning in 2020. still must pay an employee a minimum the transition in December, your newly
hourly wage ($8 an hour in Arkansas) non-exempt employees may be tempted

36 Issue 3 2016 | ARKANSAS TRUCKING REPORT