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U.S. Dept. of Labor Expands Overtime Eligibility

The United States Department of Labor has announced a new rule that it claims will extend overtime protections to an estimated 4.2 million workers who currently are exempt. The effective date of the new rule is December 1, 2016.

The Fair Labor Standards Act (FLSA) currently requires that most employees in the U.S. be paid at least a minimum wage and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a work week. However, the FLSA provides an exemption from both minimum wage and overtime pay for individuals employed as executive, administrative, professional, outside sales and computer employees. Moreover, some occupations are not eligible for overtime pay (including teachers, doctors and lawyers).

Generally speaking, to qualify for the exemption under the FLSA, employees were required to meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. The new rule increases the salary level required for the exemption from $455 a week ($23,660 annually) to $913 a week ($47,476 annually). The increase is of particular significance in New York State, since the standard weekly salary level required for the overtime exemption in New York is currently $675 a week.

In addition, the new rule increases the threshold salary level for highly-compensated workers. Such workers were exempt from overtime pay if their annual compensation was $100,000 and they performed certain duties. The new threshold is $134,000 per year.

Future updates to all of these thresholds will occur every three years, beginning on January 1, 2020.

Partner Andrew A. Kimler, Esq. practices in the firm’s Commercial Litigation and Employment Law Practice Groups. He can be reached at akimler@vmmlegal.com or 516.437.4385, ext. 122.