U.S. DEPARTMENT OF LABOR RELEASES NEW REGULATIONS ON EMPLOYEE CLASSIFICATIONS FOR OVERTIME – EFFECTIVE DECEMBER 1, 2016

November 29, 2016

The U.S. Department of Labor published sweeping new regulations that broaden federal overtime pay regulations to cover nearly five million employees.  The regulations effectively raise the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” (i.e., executive, administrative and professional employee classifications) exemption — from $23,660 to $47,476 per year.  The new threshold will become effective on December 1, 2016.

Practically, what this means for your U.S. operations is that many employees currently identified as being “exempt” from overtime may have to be reclassified as “non-exempt” and thus be made eligible for overtime after working 40 hours in a week solely on the basis of the amount they are paid.

We recommend you put together a list of all currently exempt employees that make less than $47,476 on December 1, 2016 and confer with counsel in order to evaluate the ramifications of this new regulatory scheme on your business and discuss potential responses which could include raising salaries, paying overtime above a salary, reorganizing workloads/adjusting schedules/spreading work hours, and adjusting wages. 

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).

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