The DOL’s Revised Overtime Regulations Are Here!

RWHRMA’s Monthly Meeting in April provided an update and overview on the Department of Labor’s (DOL) proposed revisions to the overtime regulations. As discussed, political forecasters predicted the revised regulations would be published around Labor Day on September 5thor shortly before Election Day on November 8th. Similar to weather forecasts, both predictions were wrong. The revised overtime regulations are here!!!

On May 18, the DOL announced the publication of the final rule updating the overtime regulations of the Fair Labor Standards Act (FLSA). The final rule was published in the Federal Register on May 23, 2016, and this is not light reading. To make this as easy as possible for RWHRMA members, the key provisions of the Final Rule are summarized below and also available at Here is what you need to know about the DOL’s new FLSA exemption rules:

What are the Key Provisions of the Final Rule?

  1. The salary level required to maintain exempt status under the administrative, executive and professional exemptions has increased to $47,476 per year($913 per week). This means if an employer is currently paying an exempt employee less than $47,476 per year, the employee’s salary will need to be increased to $47,476 per year or they will become non-exempt employees on the effective date of the final rule.
  1. Up to 10% of the new minimum salary can be met by non-discretionary bonuses, incentive pay or commissions, if made on at least a quarterly basis. This may help some exempt employees meet the new salary threshold.
  1. There will be automatic updates to the salary and compensation levels every three years beginning January 1, 2010. The DOL will post the new salary levels at least 150 days before the effective date. The automatic updates mean that by 2020, the salary threshold is estimated to increase to an annualized level of $51,168 (a 7.7% increase).
  1. The total annual compensation required to maintain exempt status under the Highly-Compensated Employee (HCE) exemption has increased to $134,004 per year. This exemption also requires payment of at least $913 per week on a salary basis. Additional payments to bring the current salary up to the new level can include commissions, nondiscretionary bonuses and end-of-year catch up payments.
  1. The Final Rule will become effective on December 1, 2016. Put this date in your calendars and start planning now!
  1. No changes were made to the duties test. And as with the existing regulations, there are still no exceptions or allowances made for employees of non-profit organizations, colleges or universities, or public entities.

Is this Really Happening?

Right now, the answer is yes. The Final Rule may be subject to challenge in the courts and may also be challenged under the Congressional Review Act, by free-standing legislation or by way of an appropriations rider. However, employers should not rely on any of these contingencies happening before December 1, 2016, and should being planning now.

Remember the recommended “action plan.”Employers should conduct an internal audit of their workforce to determine whether any exempt employees will no longer qualify as exempt once the salary threshold increases to $47,476 per year. If the answer is yes, employers will need to take the necessary steps to either increase the employees’ salary or convert them to non-exempt, hourly employees on or before December 1, 2016. This is not going to be an easy process, but SHRM has an FLSA Overtime Resources section available to members at: . This will certainly be helpful in the months ahead.

If you have any questions about the final DOL regulations, or any other issue addressed here, please feel free to contact Holly Hammer, Esq., Governmental Affairs Director for RWHRMA, at or at 919-829-4289.

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