New Overtime Final Rule Update

On November 22, 2016, a U.S. District Court in Texas granted an injunction enjoining the Department of Labor from implementing and enforcing the new Overtime Final Rule that was scheduled to go into effect on December 1, 2016. As many know, the new Overtime Final Rule updated the existing salary levels for exempt employees to ensure that such levels will continue to provide a useful and effective test for exemption. Prior to the new rule, the salary level was set in 2004 at $455 per week or $23,660 per year. The new overtime law raises the salary threshold to $913 a week ($50,440 a year). The new law will also increase the total annual compensation requirement needed to exempt highly compensated employees to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($134,004 annually) and provides that every three years, beginning January 1, 2020, the salary levels will be raised to the threshold to the 40th percentile of full-time salaried workers in the lowest census region. In 2020, the salary threshold is expected to be $51,168 and $147,524 for the highly compensated employees. The Department of Labor has filed an appeal to the court’s decision. A summary of the Overtime Final Rule and updates can be found here: https://www.dol.gov/featured/overtime.