The new overtime rules: 5 important Q&As.

• Position: Nuts & Bolts

Last month's much-anticipated overhaul of the nation's overtime rules (see page 1) means that employers must now consider potential changes to their compensation plans. Here are some key Q&As from the DOL's new fact sheet on the proposed changes:

Q. Who would be exempt from overtime under this proposal?

A. To qualify for exemption, an employee would generally have to meet these three requirements:

* Be salaried, meaning that he or she is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test).

* Be paid a specified weekly salary threshold (the salary level test) of at least $679 per week ($35,308 per year). The current threshold is $455 per week ($23,660 per year).

* Primarily perform executive, administrative or professional duties, as provided in the DOL regulations (the duties test).

Q. How many employees will be affected by the proposed salary level increases?

A. In Year 1, the DOL estimates that 1.1 million currently exempt employees who earn at least $455 per week but less than the proposed standard salary level of $679 per week would, without some intervening action by their employers, become eligible for overtime.

Q. How did the DOL arrive at the proposed $35k threshold?

A. The DOL calculated the standard salary amount by applying the same method used to set the standard salary level in 2004--i.e., by looking at the 20th percentile of earnings of full-time salaried workers in the lowest-wage census region (then and now the South), and/or in the retail sector nationwide.

The methodology used to set the standard salary level in 2004 has withstood the test of time...