Department of Labor Releases Final Overtime Rule

The U.S. Department of Labor (DOL) on Wednesday announced a final rule to update overtime protections for American families that will raise the salary threshold from $23,660 to $47,476 per year. The rule – which goes into effect on December 1, 2016 – is the first comprehensive update to the nation’s overtime rules since the 1970s.

“President Obama and Secretary Perez have just taken a bold and much needed step to improve the lives and earning potential for millions of Americans, including many women, low-income people, and people of color,” said Nancy Zirkin, executive vice president of The Leadership Conference, in a statement applauding the adjustment. “The rule will also prevent future erosion of overtime protections by automatically updating the salary threshold every three years. Our nation, our workplaces, and our economy have drastically shifted over the past 40 years. Workers are suffering from stagnant wages, a rollback of their right to organize, unscrupulous employment contracts that bar them from enforcing their rights in court, and a minimum wage that – due to inflation – is worth a little less every day.”

In September 2015, The Leadership Conference filed comments that were strongly in favor of the Obama administration’s proposal.

“Currently, 21.7 million salaried managerial and professional workers fall above the salary threshold and therefore are not covered by overtime protections,” the comments noted. “Those that would benefit the most from this increase include women, African Americans, and Hispanics… Under the proposed salary threshold, 44 percent of single mothers and 32 percent of married mothers who are currently exempt from overtime protections would be newly covered in 2016. More than a third of all currently exempt women workers, and nearly half of currently exempt Black and Hispanic women workers, would be covered.”

The final rule, according to DOL, will:

  • Raise Americans’ wages by an estimated $12 billion over the next 10 years, with an average increase of $1.2 billion annually;
  • Extend overtime protections to 4.2 million additional workers who are not currently eligible for overtime under federal law;
  • Update the salary threshold every three years;
  • Raise the “highly compensated employee” threshold – from $100,000 to $134,004 – above which only a minimal showing is needed to demonstrate an employee is not eligible for overtime; and
  • Respond to employers’ concerns by making no changes to the “duties test” and allowing bonuses and incentive payments to count toward up to 10 percent of the new salary level.

Read their entire fact sheet here.