Roanoke Regional Chamber
                                                                                                 May 27, 2016

Last week, The Department of Labor's Wage and Hour Division issued a new set of overtime rules under the Fair Labor Standards Act.  The rule is set to go into effect on December 1, 2016 giving employers just over six months to comply.

The Rule Does:
  • Increase the minimum salary threshold level for "white collar" exemptions at $913/week $47,476/annually from the current level set in 2004 of $455/week $23,660/annually. 
  • Set automatic increases to salary levels every three years based on inflation and full-time salary levels in the 40th percentile. 
  • Allows the use of bonuses and commissions for up to 10% of salary level
  • Increases the threshold for highly compensated employees to $134,004
The Rule Does NOT:
  • Change the duties test for "white collar" employees
  • Change the salary basis test for "white collar" employees
  • Change exempt status for teachers, doctors, lawyers or outside salesmen
The salary threshold increase more than doubles the current level and only gives employers just over six months to comply. Here are some ways businesses will adjust:
  • Increasing employee salary to at least $47,476 to retain exempt status
  • Convert employee to non-exempt status and reduce or eliminate overtime
  • Convert employee to non-exempt and pay OT time and half of regular rate
  • Convert employee to non-exempt and reduce base salary at least minimum wage and account for OT worked to balance previous pay structure
This rule is going to have a dramatic impact on businesses. There are legislative efforts to stop the new rule and Congress could submit a Congressional Review Act but timing is not favorable and neither effort would likely be veto-proof. Consequently, it's time to prepare for the new regulation and seek the advice of an employment law professional. Also, stay tuned as the Roanoke Regional Chamber is working to organize information sessions with employment law specialist to update our members.

The late Senator John C. Miller sponsored legislation SB336 this year that will transform graduation preparation for High School students. On May 12, Governor McAuliffe signed that legislation into law. The policy will direct the Department of Education to create the "profile of a Virginia graduate" with a vision to:
  • Identify skills and adjust graduation requirements to meet student needs,
  • Provide core classes in the first two years of high school and
  • Track the last two years for post-secondary education or industry certifications.
Additionally, Governor McAuliffe signed legislation that directs the Board of Education to provide licensing for industry professionals to teach career and technical education 
courses in high demand fields. The Chamber supported these pieces of legislation as integral steps in preparing all students for careers and all regional businesses with a skilled work force. 

A bi-partisan agreement was reached on GO Virginia last month and the business-led initiative is underway. If you missed our Op-Ed on the initiative please click here for an in-depth look at why we support GO Virginia and our excitement to see this legislation come to fruition.

GO Virginia Next Steps:
  • July 1, 2016 the Legislation becomes law
    • Appointments will be made to the state board 
    • Department of Housing and Community Development and the Council on Virginia's Future collaborate on implementation
  • October 15, 2016: Guidelines Completed
    • Chairmen of the Senate Committee on Finance and Committee on Appropriations will convene a work group to assist the state board in development of implementation procedures. 
The Chamber supports results-oriented economic development programs that encourage regional cooperation as a vital component to the economic future of the Commonwealth. 

Josh Baumgartner
VP Public Policy Roanoke Regional Chamber