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Department of Labor Announces Final Overtime Regulations

On May 17, 2016, the Department of Labor released its final regulations to overtime exemptions under the Fair Labor Standards Act (FLSA). 

Here is a summary of what was released:

  1. The effective date of the new regulations is set for December 1, 2016.
  2. The minimum salary basis threshold has been increased from $455 per week ($23,660 annual) to $913 per week ($47,476 annually). This represents an over 100% increase to the salary basis threshold.
  3. Updates to the minimum salary basis threshold will occur automatically every three years. The Department of Labor will utilize the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region.
  4. The total annual compensation requirement for highly compensated (HCE) subject to a minimal duties test is set at the annual equivalent the 90th percentile of full-time salaried workers nationally or $134,004 (up from $100,000).
  5. Also effective December 1, 2016, the salary basis test will allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

Employers can view the published final rule here.

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