New Overtime Rules Expands Pay for Millions

The U.S. Department of Labor (DOL) recently published changes to the overtime rule that will automatically extend overtime pay protections to approximately 4.2 million workers within the first year of implementation. The Final Rule focuses primarily on updating the salary and compensation levels needed for executive, administrative and professional workers to be exempt.  

Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

All employers will have to comply with the changes made to the overtime regulations of the Fair Labor Standards Act (FLSA) by December 1, 2016.

The DOL provides guidance for employers, non-profits, higher education and states and local governments along with fact sheets, a Q & A page, and informational webinars on the rule. Visit the DOL’s page on the final rule for more details.

Read the text of the rule here.