Legal Alert: US Department of Labor Issues New Overtime Rules

May 18, 2016 — Today, the United States Department of Labor issued substantial changes to the Fair Labor Standards Act, increasing the salary threshold for “exempt” status under the FLSA to $913 per week.

The Fair Labor Standards Act is a federal law that, in part, requires that employees receive a minimum wage and overtime unless they are “exempt” from one or both requirements. There are several exemptions, but the most common exemptions are the “white collar exemptions” that apply to those administrative, executive and professional employees who meet certain criteria based on their work duties. In addition to meeting the criteria based on duties, an employee must be paid a minimum weekly salary and be paid on a salary basis in order to be an exempt employee.

Currently, the minimum weekly salary (or salary basis) is $455 per week (or $23,660). However, effective December 1, 2016, the new minimum weekly salary will be $913 per week (or $47,476 annually).

This means that if your currently exempt classified employees are not being paid at least $913 per week, as of December 1, 2016, they may no longer be exempt from the FLSA requirements and could be subject to overtime, as well as certain record keeping requirements, if they work more than 40 hours in a work week.

Most employers will be subject to this new FLSA standard and/or similar state or local laws. However, there may be limited exceptions for small nonprofit employers. Nonprofits are encouraged to seek legal advice regarding whether or not these exceptions may apply to their workforce.

If you would like to read more about the new rules, you can find additional information, including guidance for nonprofits, here.