Thursday, May 19, 2016

Labor Department's Final Rule on Overtime

According to the U.S. Department of Labor website, on May 18, 2016 President Obama and Secretary of Labor Thomas E. Perez announced a Federal Register final rule updating overtime regulations. The website lists the following key provisions of the Final Rule which goes into effect on December 1, 2016:
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
See more information including fact sheets at

See the final rule at
(Please note: until May 23, 2016 you can download only a pre-publication PDF version of the rule from this link.)