overtime 2

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Well, finally. This morning, the U.S. Department of Labor (DOL) issued its final rule, about two years and two months after President Obama directed the Department to update, streamline and modernize overtime regulations under the Fair Labor Standards Act (FLSA).

The Department estimates that the compensation of more than four million workers will be impacted by the new rule, the majority of whom are between the ages of 25 and 54.  More than two-thirds of the affected workers have at least some college education. Most will be women.  And fully one-fourth work in California, Texas or Florida. 

 Some important things change in the new rule, and some do not. Three requirements must still be satisfied for a “white collar” employee to remain exempt from his or her employer’s obligation to pay overtime. 

  1. The employee’s pay cannot be subject to reduction based on the quality or quantity of work.  
  2. The employee’s primary job duty must involve the kind of work associated with exempt executive, administrative or professional employees.  
  3. The employee must meet a minimum salary level. 

But under the new rule which becomes effective December 1, that minimum salary level jumps from $455.00 per week to $913.00 per week (the equivalent of $47,476.00 annually), up to ten percent of which can come in the form of nondiscretionary bonuses, incentives and/or commissions, if certain payment requirements are met. In addition, the minimum salary level for the existing overtime exemption for “highly compensated employees” will rise from $100,000.00 to $134,004.00 annually.

Employers have about six months to evaluate their existing workforce and bring payrolls into compliance.