The New Federal Overtime Regulations: Are You Ready? -

On May 18, 2016, the U.S. Department of Labor (DOL) issued its Final Rule updating its regulations to increase the salary threshold required to qualify for the federal Fair Labor Standards Act’s “white collar” exemptions. The DOL estimates that the updated regulations, which more than double the minimum salary for a white collar exemption to apply, will cause 4.2 million currently exempt workers to be entitled to minimum wage and overtime protection, absent intervening action by their employers, at a cost of $1.2 billion in additional overtime pay in the first year alone. Employers must be in compliance with the new regulations by December 1, 2016, when they become effective. For employers who have not yet begun to grapple with the myriad implications of the new regulations, there is no time to lose. Here’s why.

Background of the new regulations -

The Fair Labor Standards Act (FLSA) guarantees a minimum wage—currently $7.25 per hour—for all hours an employee works during a workweek and overtime pay of not less than one and one-half times the employee’s regular rate of pay if the employee works more than 40 hours in a workweek. The protections apply to most workers, but there are exemptions from the minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees—the so-called white collar exemptions. To be considered exempt under a white collar exemption, an employee must meet certain minimum requirements related to his or her primary job duties—the so-called duties test—and, in most instances, be paid on a salary basis at not less than the minimum amount specified in the regulations, currently $455 per week, or $23,660 per year for a full-time employee.