October 12, 2016
For Immediate Release: October 12, 2016
Media Contact: Julie Rabinowitz, 621-5009
Changes to the federal overtime exemption rules go into effect December 1
AUGUSTA–The Wage and Hour Division of the Maine Department of Labor’s Bureau of Labor Standards has proposed changes to the state’s rules affecting salaried workers exempt from overtime that reflect changes being made by the federal government. Maine statute incorporates the salary exemptions to overtime by reference to the federal Fair Labor Standards Act in Title 26, Chapter 7, §663-3, and the changes will apply to all employers in the state.
“We are working to educate Maine’s employers and employees about these changes,” Commissioner of Labor Jeanne Paquette stated. “Although we support efforts to delay the implementation of these new rules because of the dramatic affects they are having on costs, budgets, schedules and duties for both workers and businesses, we do advise businesses to plan ahead. This rulemaking is part of that process—we are aligning the regulations to eliminate areas of potential confusion for workers and employers.”
Commissioner Paquette continued, “Most important, we encourage all employers to communicate regularly with their employees about not only what changes are being considered but also how they will be implemented to minimize the effect on operations and employee morale. This law affects every employer in the state, including non-profits.”
The state has proposed changes to the “Rules Governing Definitions for Executive, Administrative, and Professional Exemptions from Minimum Wage and Overtime” (proposed rule number: 2016-P162). A public hearing will be held on Thursday, Nov. 3, 2016, from 10 to 11 a.m. at the department’s headquarters in Augusta. Public comments may be submitted by noon on Monday, Nov. 14, 2016, to Jeanne St. Pierre, director of legislative and constituent affairs, Maine Department of Labor, 54 State House Station, Augusta, ME 04333-0054 or by email at Jeanne.StPierre@Maine.gov . The rulemaking notice is available at: http://www.maine.gov/sos/cec/rules/notices/2016/101216.html .
The Department has scheduled several compliance assistance courses, “Federal Overtime Rule Changes as they apply to Maine Employers” to help employers understand their obligations under the law. To enroll, visit http://www.maine.gov/tools/whatsnew/index.php?topic=Safetyworks_Classes&v=ListAll . Classes will be held in Augusta on Nov. 10, 21 and 28, 2016.
Most employers face making some compensation changes to conform to the new rules issued by the U.S. Department of Labor (USDOL). If employers have not yet done so, the Maine Department of Labor recommends that they develop a plan that includes conducting an internal analysis of exempt positions, identifying options, and implementing a plan to minimize negative effects on employee relations, direct payroll costs, indirect administrative costs, and general operations.
Employers are strongly advised to conduct their own classification analysis to review those employees for whom they currently claim overtime exemptions and decide whether to:
- Pay time and a half of the employee's regular rate of pay for any overtime work. - Convert to a fluctuating work week method (guaranteed salary with overtime at the half-time rate). - Raise the employee's salary to at least the new threshold. - Limit the employee's hours to 40 hours or fewer per week. - Some combination of the above.
The Maine Department of Labor has posted guidance for employers on its website at http://maine.gov/labor/labor_laws/overtime.html .
Paquette noted, “We work closely with all of our workforce and economic development partners to continue to improve Maine’s economy so that all workers enjoy the benefits of rising wages, and we will continue to find opportunities to decrease our state’s regulatory burden while increasing compliance with employment laws.” There are four major changes to USDOL's rules with which Maine law should align so as to avoid creating compliance problems for employers.
- A new salary threshold for qualifying executive, administrative and professional exempt employees equaling $913.00 a week. This is an increase of $458 from the current required amount of $455 a week.
- An automatic increase in the salary threshold every three years based on a 40th percentile of weekly earnings for full-time salaried workers in the lowest paid region of the nation. The next increase is scheduled for Jan. 1, 2020. USDOL will provide at least a 150-day notice of the amount and effective date of future increases.
- An increase in the threshold for highly compensated employees (HCE) to $134,004 per year. HCE is not addressed in Maine's rules. Changes in Maine's rules will help clarify the department's position and align with USDOL.
- Allowing employers to credit up to 10 percent of the salary level with non-discretionary bonuses and/or commissions (other incentive pay), as long as they are paid at least quarterly or more frequent basis.
The department’s Bureau of Labor Standards helps workers and businesses make their worksites safer, educates about and enforces wage and hour laws and gathers information on working in Maine.