Dept of Labor 2016 Overtime Rule

The much anticipated overtime rule was finalized today. The Department of Labor (DOL) finalized a rule to update overtime protections so they can help millions of Americans receive the overtime pay they have earned. The final rule will take effect on December 1, 2016. This rule, will double the salary threshold from $23,660 to $47,476 per year. Additionally, this new level will automatically be updated every three (3) years to ensure that workers continue to earn the pay they deserve.

There are six (6) key areas the rule will address including:

  • 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 (3) 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 payment to count toward up to 10 percent of the new salary level.

The DOL has also released three (3) technical guidance documents designed to help private employers, non-profit employers, and institutions of higher education come into compliance with the new rule.

For additional information, please reach out to your Sikich HR Consultant. You may also reference this link.


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