The U.S. Department of Labor (“DOL”) has announced the final rules concerning overtime for white collar employees under the Fair Labor Standards Act (the “FLSA”). Generally, white collar employees are exempt from overtime if they are salaried, make more than the salary threshold set by the DOL and their primary duties are consistent with executive, professional or administrative definitions as outlined by the DOL.Effective December 1, 2016, the salary threshold for employees to qualify as exempt from overtime pay requirements under the FLSA will be doubled – from $23,660 to $47,476 annually or from $455 to $913 per week. Significantly, the new rules permit employers to count nondiscretionary bonuses and incentive payments such as commissions toward as much as 10 percent of the salary threshold, provided these payments are made on a quarterly or more frequent basis. Notably, the new rules also increase the annual compensation threshold for certain highly compensated employees from $100,000 to $134,004. The new rules do not, however, change the duties test.With the implementation of these new rules, the DOL estimates that 4.2 million employees will be subject to reclassification from exempt to non-exempt and will become eligible for overtime pay for hours worked in excess of forty hours in a work week at the rate of one and one-half times the employee’s regular rate of pay. The new rules further provide that the salary threshold will be automatically updated every three years.To the extent an employer must reclassify employees from exempt to non-exempt in response to the new rules, there will likely be a corresponding impact on the employer’s business costs, including payroll. The DOL estimates that the new rules will increase wages for employees by $12 billion over the next 10 years.To minimize the financial burden, employers need to explore the options available to respond to the increased salary threshold. For example, it will be necessary to evaluate whether to pay overtime to these newly non-exempt employees or to raise their salaries in order to meet the new salary threshold. Alternatively, the adoption of policies and procedures focused on the management of the work hours of employees who become eligible for overtime need to be considered. Such policies and procedures could include the elimination of remote access to work email or computer systems or the implementation of timekeeping systems.In light of these new rules, now is the time for employers to review their FLSA exemption classifications and assess which employees may be affected by the new rules.Attorney Loren Speziale regularly counsels businesses on corporate and employment matters including business formation, contracts, handbooks and policies, and matters involving personnel policies and claims.