Administration Releases New Overtime Rules

The Department of Labor has released its long awaited rule updating the regulations governing overtime pay for employees. Under the current regulations, the salary threshold for exemption is $455 per week ($23,660 per year) and the new rules will update that exemption level to the 40th percentile of weekly earnings for full-time salaried workers ($970 per week, or $50,440 annually in 2016). The new rule is set to expand the number of employees eligible for overtime by an estimated 5 million. In addition, the rule may require employers to reclassify all employees earning under $54,400 and more closely track their job duties, earnings, and hours worked to determine whether the worker’s activities and compensation may actually make them exempt for overtime.

The Fair Labor Standards Act (FLSA) exempts certain employees from overtime requirements, including Executive, Administrative, and Professional (EAP) employees, as well as select salespeople working outside the office. While the proposed rules do not make any specific changes to the duties test, which determines an employee’s classification, the Department of Labor is seeking comments on the current requirements.