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New Overtime Rules are Here: What You Need to Know

It's Compliance Time!
DOL Unveils New Overtime Rules;
Here's What You Need to Do Now

After two years of speculation and hand-wringing, the U.S. Department of Labor published its much-anticipated overhaul of the nation's overtime rules today.

The big news: the DOL has effectively doubled the current $23,660 salary threshold, meaning exempt administrative, executive and professional employees will be eligible for overtime pay as long as they don't earn more than $47,476 per year ($913 per week). White-collar employees who earn that amount or less will be eligible for overtime pay when they work more than 40 hours in a workweek.

The new threshold goes into effect on Dec. 1, 2016, when the White House estimates some 4.2 million additional white-collar employees will suddenly qualify for overtime pay. The changes don't require congressional approval.

Special webinar tomorrow! What do the new OT rules mean—and how should your organization respond? Register now for our special webinar, The New Overtime Rules: How to Comply, to learn answers to all your questions. We're offering the webinar on two dates: Thursday, May 19 and Wednesday, June 8 (both 1:00pm Eastern).

The new $47,476 salary threshold—lower than the $50,440 proposed by the White House last summer—will automatically update every three years based on wage growth, so as to keep current with inflation rates.

Another key decision: Much to the relief of U.S. employers, the DOL decided not to make any changes to the so-called duties test, which analyzes an employee's actual duties to determine whether he or she is exempt from overtime pay as an executive, administrative, learned professional, computer and outside sales employee.

Other key changes:

  • The $47,476 salary threshold will be changed every three years. It will be based on the 40th percentile of full-time salaried workers in the country's lowest income Census region (currently the South). The next update will occur Jan. 1, 2020.
  • Currently, nondiscretionary bonuses and commissions don't count toward the salary threshold. These new rules allow up to 10% of the salary threshold to be met by commissions and nondiscretionary bonuses or incentives—for example, those tied to productivity and profitability—as long as the variable pay is issued at least quarterly.
  • The new rules raise the "highly compensated employee” threshold from $100,000 to $134,004 per year.  This figure will also be reset every three years.

You've got a lot of work ahead of you. If you're tasked with implementing the OT rules, get answers to all your questions tomorrow, May 19 at 1:00pm Eastern at our special webinar, The New Overtime Rules: How to Comply. We will also present the training session on Wednesday, June 8.

According to the Labor Department, employers can comply by:

  • Increasing the salaries of exempt administrative, executive and professional employees to meet or exceed the new threshold, thus preserving exempt status under the Fair Labor Standards Act
  • Paying overtime—one-and-a-half times the employee's regular rate of pay—for any hours worked in excess of 40 per week
  • Reducing or eliminating overtime hours
  • Reducing base salary and adding pay to account for overtime for hours worked over 40 in the workweek, to hold total weekly pay constant
  • Using some combination of those strategies

Still have questions? Get answers to all your questions tomorrow, May 19 at 1:00pm Eastern at our special webinar, The New Overtime Rules: How to Comply. We will also present the training session on Wednesday, June 8.

The Department of Labor last revised the overtime rules in 2004, the only time they have been officially changed since the FLSA was enacted in 1938. The current effort began in March 2014, when President Obama ordered the Department of Labor to "update and modernize America's overtime pay system.” Proposed rules were finally issued in June 2015 and the final rules announced today. In the end, the final rules differed only slightly from last year's proposed rules.

Final note: Visit for more on this developing story and what employers need to do to make sure their policies and practices align with the new rules.

Training webinars:

The New Overtime Rules: How to Comply

Thursday, May 19, at 1:00 pm Eastern or Wednesday, June 8, at 1:00 pm Eastern

Certification credits: 1.25

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