This past May, the Department of Labor (DOL) published a Final Rule that will update the country’s overtime regulations found within the “Fair Labor Standards Act.” These updated regulations, which officially take effect on December 1, 2016, will automatically extend overtime pay protections to millions of American workers.
Though it’s not uncommon for the DOL to amend the nation’s overtime law, this recent update is dramatically different from previous adjustments, because it will increase the White Collar Exemption salary threshold by more than 100%.
The DOL’s Final Rule focuses primarily on updating the salary and compensation levels that are needed for executive, administrative, and professional workers to be exempt. Several key provisions of the rule include:
- The White Collar Exemption salary threshold will be increased from $455 per workweek (or $23,660 per year) to $913 per workweek (or $47,476 per year).
- The Highly Compensated Employee annual compensation requirement will be increased from $100,000 to $134,004.
- The salary basis test will be amended to allow employers to use nondiscretionary bonuses and incentive payments—including commissions—to satisfy up to 10% of the new standard salary level.
- A mechanism will be established to automatically update the salary and compensation levels every three years – with the first update scheduled for January 1, 2020.
It’s important to note that Republicans in both the U.S. House and U.S. Senate have proposed two bills (H.R. 5813 and S. 2707) that would counter the DOL’s Final Rule. However, the likelihood of either of these mandates becoming law before the December 1st implementation date is slim-to-none.
For more information on the DOL’s Final Rule, check out the following resources:
- Overtime for White Collar Workers – Overview and Summary of Final Rule
- Fact Sheet – Overtime Final Rule
To view the “Fair Labor Standards Act” in its entirety, click here.