November 21, 2016

Overtime Rule Update

The Fair Labor Standards Act (FLSA), which prescribes standards for the basic minimum wage and overtime pay, affects most private and public employment. Unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay.

Key Changes

The final rule focuses primarily on updating the salary and compensation levels needed for executive, administrative, and professional workers to be exempt. Changes include:

  • Raising the salary threshold excluded from overtime rules from $455 a week to $913 per week, or $47,476 annually.
  • Sets the highly-compensated employee (HCE) total annual compensation level to $134,004 annually.
  • Establishes a mechanism for automatically updating the salary and compensation levels every 3 years, beginning on January 1, 2020.

Job titles never determine exempt status. Receiving a particular salary alone does not indicate that an employee is exempt. Rather, in order for a white collar exemption to apply, an employee’s specific job duties and earnings must meet all of the applicable requirements provided in the regulations. The DOL is not making any changes to the current job duties tests.

For more information, please refer to the DOL’s website on the final rule, which offers employers comprehensive resources including fact sheets, Q&A, guidance for businesses, and more.

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