The US Department of Labor (DOL) is currently in the process of revising federal overtime rules such that an estimated 5 million more white-collar workers soon will be eligible for overtime pay. The DOL has been in the process of revising federal overtime rules since last summer and it received nearly 300,000 comments to the proposed rule after it was announced. The last time the rules were revised was in 2004.
The federal minimum wage and over regulations apply to most public and private sector employees. Under the regulations, when employees work more than 40 hours per week, they are entitled to overtime pay equal to 1.5 times the usual pay rate. Currently, employees are exempt from federal overtime rules if:
- they are paid a fixed salary
- they are paid more than $455 a week ($23,660 annually), and
- they primarily perform executive, administrative or professional duties, as defined in DOL regulations; or
- they qualify as an exempt highly compensated employee earning $100,000 or more annually.
The proposed regulation would raise the salary test for white-collar workers to approximately $970 a week ($50,440 annually), which would be adjusted every year for inflation. It also raises the annual compensation required to exempt highly compensated employees to $122,148 annually.
The final overtime regulations are expected to be published in July 2016. Once the final rules are published, employers will likely have 60 days to comply. Employers may need to consider raising salaries of exempt employees or reclassifying workers as nonexempt. Reportedly, the DOL is also considering changing the duties test, which may require separating an employee’s overtime exempt job duties from overtime nonexempt job duties. The DOL has not announced a target date for regulations revising the duties test.
We invite you to keep reading CPC’s blog for future updates on this topic.