Today, the U.S. Department of Labor (USDOL) issued its Final Rule modifying overtime requirements under the Fair Labor Standards Act (“FLSA”). The Final Rule makes material changes to the application of overtime exemptions, and will take effect on December 1, 2016.
In 2014, President Obama directed the Secretary of Labor to simplify and modernize the overtime rules to make them easier for employees and employers to understand and apply. As we previously wrote, in July 2015 the USDOL issued its proposed rule changes to the “white collar” exemptions to overtime pay, which apply to Executive, Administrative, Professional, Outside Sales and Computer Employees. The proposed rules addressed the salary basis test but not the duties test, both of which need to be satisfied in order for the exemption to apply. The USDOL requested comments from the public on its proposed changes to the salary basis test and on whether the USDOL should consider changes to the duties test as well.
By the time the comment period ended on September 4, 2015, the USDOL had received approximately 270,000 comments on the proposed rules. Among the concerns expressed was that the USDOL sought a substantial increase in the minimum salary threshold from $455 per week ($23,660 per year) to $970 per week ($50,440 per year), with automatic annual revisions/increases.