The final rule on overtime pay protection was signed by president Obama and published on May 18, 2016. The rule takes effect December 1, 2016. The DOL estimates that the new rule will extend the right to overtime pay to an estimated 4.2 million workers.
Which businesses are affected?
Generally, businesses and nonprofit organizations with gross annual sales of $500,000 or more must extend overtime pay to qualified employees. For nonprofits, only UBIT sales are considered toward the $500,000.
In addition, all hospitals, businesses providing medical or nursing care for residents, schools (whether operated for profit or not for profit) and public agencies must comply with the new rule.
Businesses must also extend protection to employees whose work regularly involves them in commerce between States (“interstate commerce”), even if the business is not covered on an enterprise-wide basis.
Which employees are affected?
Generally, overtime pay protection is extended to full-time salaried workers with earnings up to $47,476 annually or $913 per week. Bona fide executive, administrative, and professional (“EAP”) employees are exempt. In addition, the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test is increased to $134,004. Nondiscretionary bonuses and incentive payments (including commissions) may be used to satisfy up to 10 percent of the new standard salary level.
Future automatic updates to salary thresholds will occur every three years, beginning on January 1, 2020.
What is overtime pay?
Employees covered by the Fair Labor Standards Act must receive pay for hours worked in excess of 40 in a workweek at a rate not less than one and one-half their regular rates of pay.
Check the DOL’s FAQs for more information.
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