Department of Labor Releases Final Overtime Rule
On May 18, 2016 the Department of Labor released its final Overtime Rule. This final rule increases the salary exemption threshold from its current level of $455 a week or an annualized amount of $23,600 to $913 a week or $47,476 annually. This represents a massive increase in the amount of employees who will now be eligible to collect overtime pay.
This Final Rule is scheduled to go into effect on December 1, 2016, and it will have a dramatic effect on employers. Under this rule, any salaried employee that works 40 hours and is paid an annual wage of less than $47,476 could qualify under the Fair Labor Standards Act (FLSA) to receive overtime pay by their employer. Under the Fair Labor Standards Act employees working more than 40 hours a week would receive 1.5 times their salary for each additional hour worked beyond 40. As was discussed during the TRALA Annual Meeting, this could impact not only regular working hours, but time spent checking messages on hand-held devices or any other time that could be construed as "working."
Additionally, the salary levels are subject to automatic adjustments every three years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest-wage Census region (currently, the South). The final Rule does allow for some bonuses to be considered as part of the employee's overall salary and the Rule also leaves in place the primary duty test that can be used to determine whether an employee is considered exempt.
You may view the final Overtime Rule by clicking here.
TRALA anticipates legislative efforts to undo the Rule by Congress but those will face a certain presidential veto. The only realistic option to thwart this Rule is through legal challenges which TRALA has already heard will be filed soon. It remains to be seen how successful a lawsuit would be given recent court rulings on similar issues.
If you have any questions, please contact Peter Einisman or Andrew Stasiowski regarding the final Overtime Rule.