The Vision Council has published the new overtime ruling from The Department of Labor for which employees must be paid overtime under the Fair Labor Standards Act (FLSA). The new thresholds go into effect on December 1, 2016.
Under the FLSA, an employer is required to pay overtime (time-and-a-half) to an employee for hours worked beyond 40 per week, unless he meets both of the following:
- He/She is paid at least the minimum salary threshold
- He/She performs exempt (i.e., discretionary) functions that are executive, administrative, or professional in nature.
An employer is also not required to pay overtime to an employee who meets the definition of “highly compensated” under the FLSA, regardless of job function.
The new regulations make the following key changes:
- Increase the minimum salary threshold from $455 per week (approximately $23,660 annually) to $913
per week (approximately $47,476 annually).
- Increase the total annual compensation level for highly compensated employees from $100,000 to
- Install an automatic update procedure, which will update the salary thresholds every three years (beginning January 1, 2020). The update will raise the minimum salaries required to meet the minimum threshold and highly compensated exemptions to the 40th and 90th percentile of national full-time salaried workers, respectively.
Some have estimated that these new rules could make up to 4.2 million new workers eligible to receive overtime pay. Employers should carefully review their employee classi cations and ensure that