The Department of Labor finalized a rule that will update overtime protections under the Fair Labor Standards Act of 1938 (“FLSA”). The FLSA provides, among other things, that workers be paid time-and-a-half for any hours worked over 40 hours in a week. In general, all hourly employees are guaranteed overtime, and salaried employees are presumed to have the same guarantee unless they both: (1) make more than a salary threshold set by the Department of Labor, and (2) pass a test demonstrating that they primarily perform executive, administrative, or professional duties. A limited number of occupations are not eligible for overtime pay (including teachers, doctors, and lawyers) or are subject to special provisions.
The final rule, which takes effect on December 1, 2016, doubles the salary threshold – from $23,660 to $47,476 per year – under which most salaried workers are guaranteed overtime (hourly workers are generally guaranteed overtime pay regardless of their earnings level). A White House press release estimates that the new threshold will extend overtime protections to 4.2 million additional workers who are not currently eligible for overtime under federal law.
The Final Rule also establishes a process where the salary threshold will be automatically updated every three years. Based on projections of wage growth, the threshold is expected to rise to more than $51,000 with the first update on January 1, 2020.
Additionally, the Final Rule raises the “highly compensated employee” threshold – from $100,000 to $134,004. The highly compensated employee threshold is significant as only a minimal showing is needed to demonstrate an employee is not eligible for overtime for employees above this threshold.
To read the Fact Sheet about the Final Rule, please click here.
Authors: Matthew John Markling and Patrick Vrobel
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.