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Final Overtime Rule Released with Concessions to Employers: Member Alert

The Department of Labor (DOL) has released the final version of the Overtime Exemption Rule, which will force clubs to pay overtime to any employee making less than $47,476 per year. The final rule will take effect on Dec. 1, 2016.

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).

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 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 Jan. 1, 2020.

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

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

NCA will continue to work to stop the rule before it goes into effect. Our next efforts will be to help pass the Protecting Workplace Advancement and Opportunity Act and then push to defund the rule.

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