On May 18, 2016, the U.S. Department of Labor announced the release of final regulations that make significant changes to overtime regulations under the Fair Labor Standards Act (FLSA). The changes include increasing the minimum salary threshold required to qualify for the Fair Labor Standards Act's “white collar” exemption to $47,476 per year.
Key elements of the new regulation include:
- Salary Threshold Changed to $913/week ($47,476 per Year) This threshold doubles the current salary threshold level.
- Automatic Salary Threshold Increases Every 3 Years The threshold will be adjusted every 3 years to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage Census region.
- Duties Test is Unchanged DOL did not make changes to the standard duties test.
- Effective Date is December 1, 2016. With the rule going into effect on December 1, 2016, HR offices should review their current workforce to identify which employees are affected, whether to re-classify those employees, and develop a communications strategy. HR offices should keep in mind the periodic adjustments and set a regular review process.
- Highly Compensated Employee (HCE) Exemption Is Now $134,004 Per Year The highly compensated employee methodology sets the threshold at the 90th percentile of full-time salaried workers nationally.
- Bill Pending in Congress to Modify DOL Rule The Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773) bills are pending in U.S. Congress, which if passed may nullify this rule.
To access the DOL final overtime rule, a questions and answers document and other resources provided by the U.S. Department of Labor, click on the link below.
https://www.dol.gov/WHD/overtime/final2016/