DOL Issues Final Rule Updating Overtime Regulations

On May 18, 2016, the Department of Labor published its final rule updating overtime regulations. The Rule focuses primarily on updating the salary levels required for Executive, Administrative, and Professional workers to be exempt.  The salary level was increased to $47,476 annually.  This represents a significant increase from the previous level of $23,660.  Additionally, the total annual compensation requirement for highly compensated employees was increased to $134,004.  Exempt highly compensated employees need only regularly perform at least one of the exempt duties of an exempt executive, administrative, or professional employee.

This Rule, which becomes effective on December 1, 2016, is expected to extend overtime pay protections to over 4 million workers. Future automatic updates to the salary thresholds will occur every 3 years beginning on January 1, 2020.  Employers should closely examine the job duties and salary levels of their employees in order to determine whether the DOL’s updated Rule affects employees’ exemption status.  Notably, the new Rule does not change the duties test in determining whether an employee can be classified as exempt.