Earlier this year, the U.S. Department of Labor
issued a final rule relating to overtime pay that changes the minimum salary level for those
considered to be non-exempt employees (meaning those employees not eligible for
overtime wages for time worked over 40 hours in a week). In a nutshell,
the new rule raises the salary threshold from $455 per week to $913 per
week (equating to $47,476 per year). This salary threshold will now
be automatically adjusted by the DOL every three years, with the first update
scheduled for January 1, 2020. The revised rule does not change
the duties test to determine whether a worker whose salary is above the
minimum threshold is eligible for overtime.
The revised rule becomes effective December 1, 2016.
Although the effective date is a few months
away, businesses should begin to assess the impact that the rule will have on
their business so that appropriate adjustments can be made, and be sure to have
those adjustments in place as of December 1st. Many businesses will need to revise the manner in which they track hours worked (or start to track hours worked) for certain salaried employees, who may become eligible for overtime pay under the new rule.
When evaluating the exempt vs. non-exempt
classification, it is important to remember that whether someone is eligible
for overtime or not is never dependent on that person’s job title; rather, it
is dependent on that persons duties. To claim someone as exempt under the
duties test, then their salary must equal the new threshold and
they must pass the duties test for the type of role in which that employee
serves. Exempt employees (who have salaries at or above the new threshold
and they pass the duties test for exemption) are not paid overtime for hours
exceeding 40 per week. Employees
determined to be non-exempt based on their duties (regardless of salary level)
would be eligible to receive overtime pay for hours worked over forty hours per
The document at this link from the Department of Labor is a great resource
for employers (and us lawyers) in helping to understand the new overtime rule, and managers should review this information from the DOL. Also, for more information on the new rule, visit here.
Photo credit: Benjamin Child, via Unsplash