Expansion of Overtime Wages Protection to 4 Million Workers – Final Rule

On May 18, 2016,over 270,000 comments, President Obama announced the publication of the Department of Labor’s Final Rule updating the overtime regulations, which will automatically extend overtime wages protections to over 4 million workers within the first year of implementation. Specifically,the Department of Labor updated and expanded the regulations defining which “white collar” workers are protected by the Fair Labor Standard’s Act’s (“FLSA”) minimum wage and overtime standards.  The Final Rule is set to take effect on December 1, 2016. The Final Rule significantly affects Ohio workers who could now be entitled to overtime wages.

Importantly, salaried employees must now be paid $913 per week or $47,476 annually to be exempt from overtime wages. The increase is substantial compared to the previous threshold ($455 per week or $23,660 annually).

What does the new rule mean for “salaried” employees? If you are a “salaried” employee and work over 40 hours per week, you must be paid at least $913 per week or $47,476 annually. If not, but you still work over 40 hours per week, you may be entitled to overtime wages. If you have questions, please contact the wage and hour attorneys at Bryant Legal, LLC to discuss whether you are entitled to overtime wages in more detail.

A brief overview of the key provisions to the final rule, which will take effect on December 1, 2016, is below.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

For more information, please contact us to discuss your specific Ohio overtime wages matter in more detail.

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