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Department of Labor Publishes Final Rule Raising Salary Threshold for Overtime Eligibility

June 20, 2018

The U.S. Department of Labor (DOL) has published a final rule (PDF) reclassifying millions of salaried employees from exempt to non-exempt from overtime pay under the Fair Labor Standards Act (FLSA).

The final rule goes into effect Dec. 1, 2016, and makes the following changes:

  • Raising the weekly salary threshold indicating overtime eligibility from $455 to $913, or from $23,660 to $47,476 annually

  • Raising the exemption level for what are considered "highly compensated employees" from $100,000 to $103,004 annually

  • Automatically updating the salary threshold every three years based on wage growth over time

To be considered exempt from overtime pay, an employee must be paid on a salary basis (salary basis test) in an amount that exceeds the salary threshold (and perform primary duties consistent with executive, professional or administrative positions. The final rule does not make any changes to the duties test.

The DOL estimates that the rule change will directly impact as many as 4.2 million workers nationwide and may reclassify an additional 8.9 million salaried workers as nonexempt.

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