New Rules Significantly Expand the Number of Employees Entitled to Overtime

Today the Department of Labor issued its long-awaited final rule updating the Fair Labor Standards Act overtime regulations.

The FLSA generally requires that all employees be paid 1.5 times their regular rate of pay for all hours worked in excess of 40 a week, unless the employee is “exempt.” The most common classes of the “white collar exemptions” under these rules require an employee to satisfy two tests, a salary basis minimum and a duties test.

The new final rule goes into effect December 1, 2016 and sets the salary basis minimum at $913 per week ($47,476 annually), with re-sets to occur every three years thereafter. Therefore, employees who currently are classified as exempt, but who are not paid a salary of at least $913 per week, must, starting on December 1, either be re-classified as non-exempt and paid overtime or have their salaries raised to meet the new threshold. (Employers may use non-discretionary bonuses or incentive payments -- for example, commissions -- to satisfy up to 10% of the salary threshold, as long as certain requirements are met.)

Employers immediately should identify which employees will be impacted by the new regulations and take appropriate actions by December 1.

Please contact Doug Desmarais (410-321-9348, or Kerstin Miller (410-321-5864, if you have any questions or would like assistance in complying with these new rules.

Categories: Legal Update