On May 18, 2016, President Obama announced that the U.S. Department of Labor published its final rule updating overtime regulations affecting white collar, salaried workers. The new rule focuses on increasing the salary and compensation levels triggering the executive, administrative and professional workers exemption. Under the Fair Labor Standards Act, employees are required to be paid minimum wage and overtime at the rate of one-and-one-half times their regular rate of pay for every hour worked in excess of 40 hours per workweek. However, employees employed as bona fide executive, administrative and professional employees are exempt from both minimum wage and overtime pay. In order to qualify for the exemption, employees must meet certain tests regarding their job duties, and prior to this new rule, also be paid a salary of not less than $455.00 per week ($23,660 per year). For example, if an employee met the “duties” requirement to qualify for the exemption, but made more than $455.00 per week, they would not be entitled to overtime pay. This new rule, however, increases the salary threshold to $913.00 per week ($47,476 annually).
This update extends overtime protection to over 4 million workers. This means that workers will either gain new overtime protections or an employer may raise their salary to the new salary threshold in order to maintain their exempt status. The effective date of the final rule is December 1, 2016.