Deadline Fast Approaching for the New DOL Overtime Rule

Employers have less than four months to ensure compliance with the U.S. Department of Labor’s overtime rule changes.

Effective December 1, the DOL updated the overtime pay exemption for “white collar” employees that fall within the executive, administrative and professional exemption under the Fair Labor Standards act (FLSA). This update to the Overtime Rule, which we wrote about several months ago, significantly raises the minimum salary threshold for exempt employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). This means that an exempt employee who falls below this new threshold will be entitled to overtime pay if he or she works more than 40 hours in a week.

The Final Rule also provides for automatic updating to the salary and compensation levels every three years and increases the total compensation requirement for highly compensated employees. Lastly, employers will now be allowed to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new standard level.

The overtime rules have not been updated since 2004 – resulting in a salary threshold that was outdated and did not, in the DOL’s view, properly protect white collar workers who should be covered by the FLSA’s minimum wage and overtime standards.

Penalties for non-compliance can include both payment of back wages and punitive fees, so it’s important to make sure your employees are classified properly under the new guidelines. For more information, visit the DOL’s page regarding the final rule.

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