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U.S. Department of Labor Issues Final Overtime Rule

Increases the Minimum Salary to Qualify as Exempt from Overtime Requirements

On May 17, the U.S. Department of Labor (DOL) issued a new rule for the nation’s overtime regulation. According to the DOL, the rule will serve to:

  • Raise the minimum salary threshold from $23,660 to $47,476 a year, or from $455 to $913 a week to qualify as exempt from overtime requirements
  • Raise Americans’ wages by an estimated $12 billion over the next 10 years, with an average increase of $1.2 billion annually
  • Extend overtime protections to 4.2 million additional workers who are not currently eligible for overtime under federal law
  • Update the salary threshold every three years
  • Raise the “highly compensated employee” threshold – from $100,000 to $134,004 –
  • above which only a minimal showing is needed to demonstrate an employee is not eligible for overtime
  • Respond to employers’ concerns by making no changes to the “duties test” and allowing bonuses and incentive payments to count toward up to 10 percent of the new salary level

The DOL notes that under the rule, employers will be required to raise the salaries of Employees to or above the salary level to maintain their exempt status, pay overtime in addition to the employee’s current salary when necessary or evaluate and realign hours and staff workload.

ASA members are encouraged to review these rule changes relative to their businesses prior to Dec. 1, 2016, when the final rule takes effect. For more information, please go here: www.dol.gov/featured/overtime.

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