If you have any questions in regards to the above, please do not hesitate to contact our offices so that we may explain the amendments to the provisions of the Code in more detail. Our address is:
Fiddler González & Rodríguez, P.S.C., P.O. Box 363507, San Juan, PR 00936-3507. Our fax (787) 759-3108.
We welcome your questions and comments.
José J. Santiago
Carlos A. Padilla
Antonio L. García
Vol. 2016, No.5 May 18, 2016
U.S. DEPARTMENT OF LABOR ISSUES FINAL OT EXPANSION RULE
The U.S. Department of Labor has issued the Final Rule, which revises Final regulations under the Fair Labor Standards Act (FLSA) implementing, defining and delimiting the exemption for executive, administrative, professional, outside sales and computer employees (29 CFR Part 541).
The Preamble of the Final Rule specifically states:
“Puerto Rico continues to be subject to the section 6(a) (1) minimum wage, and the Department has consistently maintained a uniform salary level for all states and also for all territories subject to the FLSA minimum wage”.
Therefore, the Final Rule fully applies to employers in Puerto Rico that are covered by the FLSA.
The Final Rule will become effective on December 1, 2016.
The key Provisions of the Final Rule are:
- Raises the minimum salary level threshold required to qualify for the FLSA’s exemptions to $47,476 per year.
- Establishes a mechanism for automatically updating the salary and compensation levels every three years.
- Amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
However, to credit nondiscretionary bonuses and incentive payments toward a portion of the standard salary level test, the Final Rule requires such payments to be paid on a quarterly or more frequent basis and permits the employer to make a “catch-up” payment.
- Sets the Highly Compensated Employee (HCE) exemption total annual compensation level to $134,004 annually. To be exempt as a HCE, the employee must also receive at least the new standard salary amount of $913.00 per week on a salary or fee basis.
The Final rule does not make any changes to any of the existing job duty requirements to qualify for the exemptions. However, we strongly recommend a careful review of all current exempt positions to assure compliance with the duty test.
In view of the above, employers must determine whether to raise exempt employees’ salaries to the new threshold, or reclassify exempt positions to non-exempt.
Be reminded that employers in Puerto Rico must also comply with all Puerto Rico Wage and Hours Laws applicable to non-exempt employees which regulates meal periods, vacation and sick leaves, salary deductions and record keeping, among others.
If you have any questions about how to comply with the new exemption rules or how they might affect your business, please feel free to contact us at your better convenience.
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