What is FLSA?
The New Rule on Overtime
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The Fair Labor Standards Act first came into being in 1938 to establish worker protections around compensation, espeically pertaining to minimum wage and overtime rates. In 2014, President Obama requested new, updated regulations because it had been more than a decade since the last time the minimum salaries were adjusted.
Key Provisions of the New Rule
On May 18, 2016, the Department of Labor issued a final rule, the "Overtime" Rule. The Final Rule focuses on distinguishing overtime-eligible employees from those who are exempt. Exempt employees are not eligible for overtime pay.
- The Rule goes into effect December 1, 2016.
- Every three years, the minimum salary and compensation levels will increase through a process called automatic indexing, beginning January 1, 2020.
- Standard salary level was increased to $47,476 per year or $913 per week.
- Employees making at least $913 per week must also pass a job duties test to be considered exempt.
- Standard salaries can include other non-discretionary means of satisying up to 10% of $913 per week requirement, including incentive payments and comissions. In this case, these non-discretionary means must be paid at least quarterly.
- Highly Compensated Employees (HCEs) minimum salary was increased to $134,004 and must be met without regards to non-discretionary means.
- Job duties criteria did not change.