By BLR Legal Editor Susan Prince, JD, M.S.L.
The federal Department of Labor’s (DOL) overtime regulations were updated and modernized in May 2016. December 1, 2016, is the effective date of these regulations. The alarming wave of Fair Labor Standards Act (FLSA) enforcement activity shows a distinct trend and emphasis on FLSA and compensation-related lawsuits brought by the DOL.
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Misclassifying an employee as exempt or nonexempt is one of the most common errors committed by employers. These simple errors result in lost overtime for employees who are entitled to overtime pay under the law and millions of dollars in damages for employers. Undoubtedly, these new rules will increase this activity further. Below is a brief snapshot of the changes affecting employers.
- Salary level increase. The most prominent change is the increase in the salary level required for exemption from overtime to an annual salary of $47,476. This translates to a weekly salary of $913 and means many more employees will be entitled to overtime beginning December 1, 2016.
- Automatic updating every 3 years. The DOL will automatically update the standard salary and compensation levels every 3 years going forward. The DOL has set the salary level at the 40th percentile of full-time salaried workers in the lowest income region in the country, which is currently the South. The DOL states that based on projections of wage growth, the threshold should rise to over $51,000 by January 1, 2020, which will be the date of the first increase.