New Overtime Rules Coming Sooner Than Expected

BY:  RACHEL D. GEBAIDE

The U.S. Department of Labor’s new overtime rules, which exponentially expands the number of workers eligible for overtime, are currently under review by the White House Office of Management and Budget (OMB).  This means the new overtime rules may take effect as early as April or May 2016, which is sooner than anticipated.  Previously, the final rule was not expected until at least July 2016.

Last year, President Obama announced the proposed rule to increase the minimum weekly salary for overtime exempt employees from $455 to $970.  In other words, the minimum annual salary for an exempt employee will increase from $23,660 to $50,440 if the U.S. Department of Labor adopts the rule and amends the current minimum salary regulations under the Fair Labor Standards Act.

Among other changes under the proposed rule, employees who currently meet the “duties” test under one or more of the executive, administrative, professional or other exemptions but whose salaries are below $50,440 per year will be reclassified from exempt to non-exempt from the overtime provisions of the FLSA.  Employers will need to keep time records for these employees and pay overtime at the rate of 1.5 times the employee’s regular rate of pay for each hour over 40 the employee works in a given work week.

If you have any questions about this development and what the proposed rule means to your business, please contact Rachel D. Gebaide at rachel.gebaide@lowndes-law.com or 407-418-6258 or Timothy C. Haughee at tim.haughee@lowndes-law.com or 407-418-6268.

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