Beginning December 1, 2016, many employers will be required to pay overtime wages to a new class of employees who had previously been considered exempt from overtime laws. Simply put, unless an employee meets ALL THREE of the following tests, he/she must be paid time and a half for any hours worked in excess of forty hours in a week. These tests are:

1. The employee is paid a straight salary, meaning the employee is paid a predetermined and fixed salary that is not subject to reduction due to variations in the quality or quantity of work;

2. The salary is in excess of $47,475 per year; AND

3. The employee’s duties fall under the category of executive, administrative or professional duties, definitions for which can be found at http://www.flsa.com/coverage.html, which also includes a summary of the law.

Please keep in mind that in order for an employee to be exempt, ALL THREE tests must be met. The law also prevents the use of comp time in lieu of overtime pay. Nor can an employer avoid overtime by “averaging” hours over the course of multiple weeks, such as someone working thirty hours one week and fifty the next.

The law does provide exemptions for amusement or recreational businesses that are truly “seasonal.” Because the definition of “seasonal” is based upon a somewhat complicated formula, it usually applies to businesses that are closed for certain periods of the year or that receive revenue during limited times. To determine if your business meets the criteria, you can refer to the Department of Labor fact sheet at https://www.dol.gov/whd/regs/compliance/whdfs18.htm.

Because penalties for non-compliance can be severe, including fines and payment of attorneys’ fees, employers should take great care in making sure they are in compliance with the new regulations.