DOL Issues New Overtime Payment Rules


On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar” exemptions under the Fair Labor Standards Act (FLSA). The final rule is effective Dec. 1, 2016.
The final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increasing from $23,660 to $47,476 per year and will be automatically updated every three years.
The salary level for the highly compensated employee exemption will increase from $100,000 to $134,004 per year. However, these individuals must receive at least the full standard salary amount each pay period ($913 per week, $1,826 bi-weekly or $3,956.33 per month) on a salary or fee basis (not counting non-discretionary bonuses and incentive payments).
To qualify for the white collar exemption, an employee must meet a salary basis test, a salary level test and a duties test in order to be exempt. The final rule does not modify the duties test employees must meet to qualify for a white collar exemption.
The DOL estimates that this final rule extends overtime protection to approximately 4.2 million workers who are currently exempt under the white collar rules and clarifies overtime compensation eligibility for another 5.7 million white collar workers.
Given the significant increase in the salary level requirement, employers will need to increase employee salaries, or reclassify certain employees as either exempt or nonexempt, solely based on their salary level. Employers must become familiar with the new rule and identify which employees will be affected. Employers should reclassify employees as exempt or nonexempt, as necessary, by Dec. 1, 2016.
Employers should also consider communicating any work schedule changes to affected employees before that date.
Finally, employers should evaluate whether implementing new timekeeping practices and training for managers and supervisors on the new requirements is necessary.
AUI has a number of resources on the exemption rule.  To learn more, contact us today.

We do more than cover small businesses and individuals with the right insurance policies and benefit plans – what motivates our team is helping you save more so you can invest more in your team, family, and goals.

Recent Articles

Federal Changes to HRA, HSA, and FSA for 2024

There have been federal changes to Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) play important roles in managing healthcare expenses for both individuals and employers. These accounts offer different tax advantages and financial benefits, but it’s critical to stay updated on the rules and regulations governing them. If you’re […]

Sign Up for Our Newsletter!

Never miss an update from AUI – sign up for our newsletter today for the latest from our team and industry!

This field is for validation purposes and should be left unchanged.

Request a
Personalized Quote

Tell us a little about your insurance needs, then we will contact you for a quick conversation about what you do, what you love, and how we can help!