Department of Labor Issues New Overtime Rule

On May 18, 2016, President Obama and Labor Secretary Perez announced that the Department of Labor’s final rule will automatically extend overtime pay eligibility to 4.2 million workers. The rule will entitle most salaried white collar workers earning less than $913 a week ($47,476 a year) to overtime pay.

The final rule will:

• Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers;
• Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability;
• Strengthen overtime protections for salaried workers already entitled to overtime; and
• Provide greater clarity for workers and employers.

The final rule will become effective on Dec. 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative, and professional employees.