Posted on Tuesday, May 24th, 2016.
U.S. Department of Labor Releases Final Rule on Overtime Regulations
On May 18, 2016, the United States Department of Labor (“DOL”) issued its long anticipated final rule amending the Fair Labor Standards Act (“FLSA”) overtime regulations. The new rule takes effect on December 1, 2016, and will require a revaluation of employee compensation, staffing and deployment.
To be exempt from overtime under the FLSA, an employee generally must perform exempt duties, and must be compensated “on a salary basis” (as opposed to being paid an hourly wage) at a salary level above a specified minimum. The long-awaited DOL rule raises the minimum salaries needed for overtime exemption. The duties an employee must perform to be exempt from overtime have not changed, and neither have the rules defining what it means to be paid “on a salary basis.”
The key provisions of the new rule that employers should know include:
The DOL projects that 4.2 million employees will be impacted by the new rule, and this is likely a low estimate. And although there is proposed legislation to block the implementation of the rule, that legislation would likely be vetoed by President Obama even if it were to pass Congress. Therefore, employers must closely examine the options they have in light of the new rule for any affected employee. An employer obviously could simply raise the employee’s salary to meet the new minimum requirement. More likely, however, employers with many affected employees will be required to reorganize workloads, amend employee schedules, and change work hours to ensure compliance with the new rule.