Final Overtime Rule Announced With Modest Changes

May 27, 2016

The U.S. Department of Labor (DOL) published its final overtime rule in the Federal Register on May 23, 2016. The final rule, effective December 1, 2016, makes a handful of changes to the regulation  originally proposed including setting a new threshold of $913 per week ($47,476 per year) in 2016, based on the 40th percentile of full-time salaried employees in the lowest wage region of the United States (currently the South); providing for automatic updates every three years; and allowing up to 10 percent of the minimum salary level may to be paid through nondiscretionary bonuses, incentive pay, or commissions.

Throughout the development of new overtime regulations, SHRM has supported as increase to the salary threshold, with the methodology used seven times previously by DOL  to update the salary threshold to the 10th or 20th percentiles of exempt salaries nationwide. However, in the final rule, DOL used the new 40th percentile methodology to calculate the threshold increasing it by 100 percent over the current level. This change will impact all employers but will have a particularly substantial impact on certain industries like nonprofits, higher education and small business. SHRM has created numerous educational resources to help HR professionals implement the rule. In addition to providing information needed to get ready for a December 1st effective date, we continue to educate Congress about our concerns with the rule and support legislation that would stop the rule until DOL conducts a more robust analysis of the impact it will have on different industry sectors.

Resources for HR professionals

Time for HR to Tell Congress How this Rule Will Impact the Workplace!

Members of the U.S. House of Representatives and Senate will be back home in their districts during the Memorial Day congressional recess (May 28-June 5). HR professionals – especially SHRM’s A-Team – need to take advantage of this opportunity to directly connect with lawmakers on the overtime rule. Please call, email, or visit your Member of Congress and explain how the final overtime rule will impact your organization and urge their support of legislative efforts to suspend the overtime regulation until DOL conducts a detailed analysis of how this rule will impact all types of organizations. Congress needs to particularly hear from nonprofits, small businesses, and public employers. Click HERE to contact your Member of Congress today!


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