Department of Labor Issues New Rule on Overtime

Monday, June 13, 2016


On May 18, 2016, the U.S. Department of Labor issued a new rule affecting the regulations on overtime pay: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.

The standard salary threshold for full-time salaried “white collar” workers is increased from $455 per week to $913 per week (or from the current annualized $23,660 to $47,476). This number is based on the 40th percentile of full-time salaried workers in the lowest-wage Census region (currently the South) and will be adjusted accordingly every three years. The highly compensated employees salary threshold for full-time salaried workers is increased from $100,000 to $134,004 per year. This number is based on the 90th percentile of full-time salaried workers nationally, and will also be adjusted accordingly every three years.

The new rule also allows up to 10 percent of the salary threshold for non-HCE workers to be met by non-discretionary bonuses, incentive pay, or commissions, provided these payments are made on at least a quarterly basis. The effective date for the new thresholds is December 1, 2016.

These threshold levels will automatically update every three years, beginning January 1, 2020. The Department of Labor will post the new salary levels 150 days in advance of their effective date, beginning August 1, 2019.

The new rule does not change the three basic tests that a worker must meet in order to claim a white collar exemption, nor does it change the elements of the duties tests that all white collar workers must meet in order to claim the exemption, either as executive, administrative or professional employees. The new rule also leaves in place the various exemptions to the overtime requirement, such as the Outside Sales Exemption and the Motor Carrier Exemption.

For more information, download NLBMDA's Regulatory Guidance: New Department of Labor Overtime Rule and visit NLBMDA's Regulatory Affairs webpage: Labor and Workforce.

NLBMDA 6/13/2016

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