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Delayed Overtime Changes Finally Delivered

Peter J. Richter

May 20, 2016

After many months of growing speculation, the U.S. Department of Labor (DOL) finally issued its final word on the overhaul of the rules governing overtime exemptions.  It is estimated that the implementation of the new overtime regulations will result in more than four million additional workers becoming eligible for overtime compensation.  The rules were revealed earlier this week but will not be effective until December 1, 2016.  Thus, businesses should use the next few months to review and prepare for the changes.

Under the Fair Labor Standards Act (FLSA), a covered employer must pay overtime to its “nonexempt” employees at a rate not less than one and one-half times the employee’s “regular rate of pay” for all hours worked in excess of 40 hours during a work week.  Conversely, under the FLSA, an employer is not obligated to pay overtime to an “exempt” employee or an independent contractor.  However, only certain classes of employees are considered exempt and only if specific conditions are met.

While the qualifications or requirements for the treatment of an employee as “exempt” from overtime had included the payment of a salary in an amount not less than $455 per week ($23,600 per year), the new regulations increase the required minimum salary to a level of $913 per week ($47,476 per year).  The new rules similarly increase from $100,000 to $134,007 the amount a “highly compensated employee” must be paid to be considered exempt.  In addition, starting on January 1, 2020, the salary threshold will automatically increase every three years to match inflation.


If you have any questions about how the information in this article may affect you or your business, please contact Peter Richter at prichter@stroudlaw.com or (608) 257‑2281 or your Stroud attorney. 

DISCLAIMER: The information in this article is provided for general informational purposes only, is not necessarily updated to account for changes in the law, and should not be considered tax or legal advice.  This article is not intended to create, nor does the receipt of it constitute, an attorney-client relationship.  You should consult with your own legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.