White House finalizes new overtime rule, effective December 1, 2016

May 19, 2016 | Bryan Barajas

Gavel  It’s official. On May 18, 2016, the Department of Labor finalized a rule to update overtime protections.  The final rule, which takes effect on December 1, 2016, doubles the salary threshold—from $23,660 to $47,476 per year—under which most salaried workers are guaranteed overtime (hourly workers are generally guaranteed overtime pay regardless of their earnings level).  Additionally, this new level will be automatically updated every three years to ensure that workers continue to earn the pay they deserve. 

According to the White House fact sheet, the new rule will:

  • Raise the salary threshold from $23,660 to $47,476 a year, or from $455 to $913 a week. 
  • Raise Americans’ wages by an estimated $12 billion over the next 10 years, with an average increase of $1.2 billion annually
  • Extend overtime protections to 4.2 million additional workers who are not currently eligible for overtime under federal law. 
  • Update the salary threshold every three years. 
  • Raise the “highly compensated employee” threshold – from $100,000 to $134,004 – above which only a minimal showing is needed to demonstrate an employee is not eligible for overtime. 
  • Respond to employers’ concerns by making no changes to the “duties test” and allowing bonuses and incentive payments to count toward up to 10 percent of the new salary level. 

The Department of Labor will also release three technical guidance documents, designed to help private employers, non-profit employers, and institutions of higher education come into compliance with the new rule. 

Read more at whitehouse.gov.

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