On May 18, 2016, President Obama and Secretary Perez announced
the publication of the Department of Laborís final rule updating the overtime
regulations, which will automatically extend overtime pay protections to over 4
million workers within the first year of implementation.
The Midstate Chamber still maintains our position that this regulation will have far more unintended consequences than USDOL has considered.
Key Provisions of the Final Rule
The Final Rule focuses primarily on updating the salary and
compensation levels needed for Executive, Administrative and Professional
workers to be exempt. Specifically, the Final Rule:
∑ Sets the standard salary level at the 40th
percentile of earnings of full-time salaried workers in the lowest-wage Census
Region, currently the South ($913 per week; $47,476 annually for a full-year
∑ Sets the total annual compensation requirement
for highly compensated employees (HCE) subject to a minimal duties test to the
annual equivalent of the 90th percentile of full-time salaried workers
nationally ($134,004); and
∑ Establishes a mechanism for automatically
updating the salary and compensation levels every three years to maintain the
levels at the above percentiles and to ensure that they continue to provide
useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to
allow employers to use nondiscretionary bonuses and incentive payments
(including commissions) to satisfy up to 10 percent of the new standard salary
The effective date of the final rule is
December 1, 2016. The initial increases to the standard
salary level (from $455 to $913 per week) and HCE total annual compensation
requirement (from $100,000 to $134,004 per year) will be effective on that
date. Future automatic updates to those thresholds will occur every three
years, beginning on January 1, 2020.
Although the Office of Management and Budget (OMB) has reviewed
and approved the Final Rule, the document has not yet been published in the
Federal Register. The Final Rule that appears in the Federal Register may
contain minor formatting differences in accordance with Office of the Federal
Register publication requirements. The OMB-approved version is being provided
as a convenience to the public and this website will be updated with the
Federal Registerís published version when it becomes available.
You may click here to be redirected to the USDOL site for guidance and to sign up for a series of webinars to assist businesses.