From: U.S. Department of Labor, Fair Labor Standards Act (FLSA)
The Department of Labor (DOL) announced the publication of the Final Rule, an update to overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited boost to many workers’ wallets is the DOL’s commitment to ensure every worker is compensated fairly for their hard work.
FLSA Overtime Rule
The federal overtime provisions contained in the Fair Labor Standards Act (FLSA) mandate that unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the Act on the number of hours’ employees may work in any workweek. The Act does not require overtime wages be paid for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on such days.
White Collar Exemptions
The "white collar" exemptions require an employee to be paid on a salary basis, paid above a certain salary level, and meet the respective duties test. If an employee meets the duties test of an executive, administrative, or professional employee, and meets the salary basis requirement, and meets or exceeds the salary level requirement, they would meet the requirements for the exemption. If employees fail to meet any part of the criteria, they would not meet the exemption and would therefore be non-exempt. The exemption is applied on an employee by employee basis, not to a classification.
New Salary Standards Under the Final Rule
Under the final overtime rule update, the new salary threshold for exempt employees is increasing to a minimum salary level of $913 per week from the previous $455 per week. The standard for highly compensated employees (HCE) is also increasing to $134,004 annually. Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
Under the new overtime provision there are no changes to the duties test, but to be considered exempt from overtime status, employees must meet the new standard salary level and the duties test.
Note: This article is not intended as legal advice and should not be understood as such. For legal questions related to your specific business, please contact an attorney who is licensed to practice law in your state.