Overtime Ceiling Set to Rise in January
Labor Department finalizes rule making 1.3 million more white-collar workers eligible for overtime pay

by Law Week

Employers have three months to prepare for the U.S. Department of Labor’s newly finalized overtime rule. But that is assuming they haven’t already, as the lift in the white-collar exemption threshold has been a long time coming.

On Tuesday the DOL released its final rule updating the salary threshold for white-collar exemption. Under the new rule, an employee must earn more than $35,568 a year, or $684 a week, to be exempt from overtime under the Fair Labor Standards Act’s salary test for white-collar workers. That jump from the current $23,660 watermark will make an estimated 1.3 million more American workers eligible for overtime, according to the DOL.

The final rule, which takes effect Jan. 1, lays out a more moderate increase than the roughly $47,000 annual earnings threshold employers braced for under the Obama administration. Employment attorneys say the $35,000 salary threshold will make more employees exempt in retail, hospitality, nonprofits and other industries with lower-paid supervisor roles.

The final rule comes with some rollbacks to the version initially proposed. The FLSA’s separate threshold for highly compensated employees, who are subject to a less stringent duties test for exemption, was set to jump from $100,000 to $147,414. But the final rule will merely bump the HCE threshold to $107,432.

Another point of consternation for employers was a proposed provision requiring the DOL to issue another rulemaking on the salary test every four years. That provision is gone in the final rule.

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