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How Do the New DOL Overtime Rules Affect My Business?

Jun 1, 2016 | Written by: Deborah B. Rosenthal, Esq. |

On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar exemptions” under the Fair Labor Standards Act (FLSA). Covered employers must comply with this rule by December 1, 2016.

This final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increased from $23,660 per year ($455/week) to $47,476 per year ($913/week), and this number will be automatically updated every three years.

The final rule does not modify the test of duties that employees must meet to qualify for a white collar exemption.  In accordance with the previous and revised rule, under the white collar exemption, any employee who earns more than $47,476 per year and is engaged in bona fide executive, administrative, professional or outside sales is not entitled to overtime pay.  It is important to realize that job titles do not determine exempt status. If an employee is engaged in “white collar” work but earns less than $47,476 per year, he or she is eligible for overtime.

What does this mean for your company?  All employers should review this new rule and determine which employees, if any, are affected.  If any of your employees are affected by this rule, you must reclassify them as either exempt or non-exempt, as necessary, by December 1, 2016.

Also, if you have employees who, as a result of this rule, are now eligible for overtime when they had previously not been eligible, you should advise these employees before December 1st.  You are permitted to change their schedules so they do not work hours that require you to pay them overtime.  

Lastly, you should review timekeeping procedures to make sure that all employees are keeping an accurate record of their time, so that if overtime pay is required, it is paid in accordance with the new rule.  Human Resources personnel and other supervisors may need to be trained on the new rule as well. 


For more information about overtime rules or other employment topics, contact Deborah B. Rosenthal, Esq. of Gebhardt & Kiefer, PC at 908-735-5161 or via email.