Have You Heard About the New Overtime Ruling? By Olga V. Tua, MBA, PHR, SHRM-CP
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n July 2015, the U.S. Department of Labor (DOL) submitted a proposed ruling to update and revise the Fair Labor Standards Act (FLSA) as it refers to the exemption for minimum wage and overtime for exempt vs. non-exempt employees. In its ruling, the DOL is pursuing to update the salary level to protect employees who might be under a misclassification and/or not being paid accordingly. On Wednesday, May 18, 2016, the DOL released the new requirements outlining the final ruling in the updated overtime rule. Under the FLSA, most employees are required to be paid at least the federal minimum wage for all hours worked, as well as get paid for overtime work at a rate of one and one-half times the employee’s regular rate for all hours worked over 40 hours in a workweek. Additionally, the FLSA covers an exemption for both minimum wage and overtime for employees that fall into a specific classification. To qualify for the exemption under this ruling, the employee must meet two criteria, one being their job duties and another related to a salary minimum requirement of no less than $913 per week. Although the newly updated 46
Vision Summer 2016 | www.cacm.org
ruling makes impactful changes to the salary minimum requirements it did not alter the job duties testing criteria. The new overtime rules increased the threshold for minimum salary from $455 per week or $23,440 annually to $913 per week or $47,476 (it also raised the highly compensated threshold from $100,000 to $134,004). In addition, the threshold will be increased every three years. The deadline to comply is December 1, 2016 giving employers more than six months to prepare. According to the Department of Labor website, an estimated 4.2 million workers will be impacted by the new overtime rules but the effect of these changes will not be felt with such an impact in California as in the rest of the nation. California is known to always have stricter overtime laws and before the new ruling it had a higher salary threshold ($41,600 annually) over the rest of the country. In addition, California requires that employers pay time-and-a-half when eligible workers reach eight hours in a day even if they do not exceed 40 hours in a week.
