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Department of Labor Issues New Overtime Rule

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Today, the Department of Labor issued the much anticipated final rule regarding changes to the overtime provisions of the FLSA. The purpose of the rule change is to narrow the category of employees who can be considered salaried-exempt.

The current law requires that in order for an employee to be considered salaried-exempt, he/she must be paid a salary, satisfy a duties test, and be paid at least $455.00 per week ($23,660.00 per year). The new rule will not change the duties test, but raises the pay threshold to $913.00 per week ($47,476.00 per year).

The new rule also raises the threshold for employees who are subject to a "highly compensated employee" exemption. The annual highly compensated threshold will increase from $100,000.00 to $134,004.00. Employees who satisfy this threshold are subject to a much less stringent duties test. If an employee exceeds the threshold, he/she can be considered salaried exempt so long as he/she performs at least one exempt duty.

The DOL estimates that 4.2 million additional employees will become eligible for overtime pay as a result of these changes.

Both salary thresholds will be updated every three years. The first update will occur on January 1, 2020. The new rule will become effective on December 1, 2016.

Here's a link to the DOL website with more details: https://www.dol.gov/featured/overtime

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