To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.
The new rule will raise the salary threshold to $684 a week ($35,568 annualized) from $455 a week ($23,660 annualized). A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high.
The new rule is expected to prompt employers to reclassify more than a million currently exempt workers to nonexempt status and raise pay for others above the new threshold.
The Society for Human Resource Management (SHRM) is pleased that the DOL has finalized the overtime rule. "Employees and employers have been waiting for an overtime salary adjustment for over 10 years," said Nancy Hammer, SHRM's vice president of regulatory and judicial engagement. "Today's rule provides important clarity for the workplace on FLSA implementation," she said.