Starnes Davis Florie


Labor & Employment Bulletin on New Increase to the Salary Threshold to be Exempt from Overtime

May 18, 2016

Webinar on New Increase to the Salary Threshold to be Exempt from Overtime

Today, the Department of Labor released details of its long-awaited change to the federal overtime exemption for “white collar” employees. To qualify for the so-called “white collar” exemption, employees are required to meet a certain salary threshold level (previously $455/week) and pass a duties test. The new rule makes no changes to the previously existing duties test. However, the new rule raises the salary threshold an employee must make to qualify for the overtime exemption to $913 per week, which would equate to $47,476 per year for a full-time employee. The new rule will go into effect December 1, 2016. In addition, this salary threshold will be automatically adjusted every three years. The Department of Labor will post new salary levels 150 days in advance of their effective date beginning August 1, 2019. It is estimated that the first adjustment will raise the salary threshold level to $51,168 in the year 2020.

The new salary threshold is set at the 40th percentile of weekly earnings for full-time salaried employees in the lowest wage census region, which is the South. The Department of Labor estimates the new rule will impact 4.2 million salaried workers nationwide, including 60,000 workers here in Alabama.

Starnes Davis Florie will be hosting a live webinar on Tuesday, May 24th at 12:00 p.m. (central time) to further discuss the new rule and to help employers prepare for its potential impact on their businesses. To access the webinar on Tuesday, click here.

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