Summer 2016
VIRGINIA RETAIL FEDERATION LEGISLATIVE UPDATE:
New Overtime Rule & Its Impact on Local Retailers What is this “Overtime” Rule, you ask? For your reading pleasure, we’ve taken the liberty of breaking down the good, the bad, and the ugly.
It is estimated that 4.2 million salaried workers will be directly affected by this rule based on their current salaries. - Department of Labor, "Overview and Summary of Final Rule"
INSIDE THIS ISSUE: 01 VRF Legislative Update 02 Letter to Members 04 The RMA Scene 06 Think. Shop. Buy. Local’s
"Loyal to Local" Campaign
08 RMA Endorsed Vendors
RMA Member Picnic & VRF Silent Auction Recap
09 Welcome New Members! 10 Distinguished Retailer of the Year Award
11 RMA News & Events
To be more specific, the standard salary threshold for full-time, salaried employees is being increased from
$455/week ($23,660 per year) to $913/ week ($47,476 per year).3
First, let’s bring everyone up to speed.
But that's not all –
In 2014, a Presidential Memorandum directed the Department of Labor (DOL) to “update and modernize” the regulations defining which white collar workers are protected by minimum wage and overtime standards under the Fair Labor Standards Act (FLSA).1
In an attempt to prevent the salary levels from becoming outdated again and ensure that a certain percentage of full-time salaried workers always qualify for overtime, the salary threshold will automatically increase every three years based on wage growth over time.
Subsequently, in an effort to put more money into the pockets of those deemed “middle class workers” and improve the work-life balance of employees, the DOL issued its final rule making changes to the FLSA’s overtime exemptions. Through this, the DOL not only seeks to update regulations, but also ensure full implementation of FLSA overtime protections and simplify the identification of overtime-eligible workers. The end goal is to make exemption easier for employers and workers to understand and apply.2
"FUN" FACT: These changes will not allow the government to take into account economic conditions, geographic cost-ofliving differences or specific impacts on certain industries.4
So, what exactly do these new regulations entail? Here is a quick breakdown. The Final Rule primarily focuses on updating the salary and compensation levels needed for employees to be exempt. One of its biggest components is that minimum salary requirements for exempt employees will more than double the previous salary threshold level.
The final overtime rule also increases the annual compensation threshold for “Highly Compensated Employees” (HCE) from $100,000 per year to $134,004 per year. This threshold equals the 90th percentile of full-time salaried workers nationally and will also be increased every three years. "FUN" FACT: The projected HCE total compensation requirement as of January 1, 2020 will equal $147,524.5
Additionally, for the first time ever, a salaried employee’s bonuses and commissions can satisfy up to ten percent (10%) of the minimum threshold for overtime exemption. The catch? These incentive payments must be non-discretionary and paid on a quarterly or more frequent basis. (continued on page 3...)