Events and News

U.S. Labor Department Issues Final Rule on Overtime

May 25, 2016

Under a final rule published by the U.S. Department of Labor on May 23, the minimum salary threshold for employees to be considered overtime "exempt" under the Fair Labor Standards Act (FLSA) will double beginning December 1, 2016.

Currently, workers earning more than $23,660 per year are not eligible for time-and-a-half pay for hours beyond 40 in a week if they also perform certain executive, professional or administrative duties.

The final rule:

  • sets the minimum salary level for exemption at $47,476 ($913/week) and the salary level for the highly compensated test at $134,004.
  • provides for automatic increases in the salary levels after three years (beginning Jan. 1, 2020), indexed to the 40th percentile of full time salary workers in the lowest wage census.
  • allows employers to count any bonuses paid on at least a quarterly basis toward 10% of the minimum salary level.
  • did not revise the duties test.
  • set an implementation date of December 1.

The Labor Department estimates that an additional 4.2 million workers will be entitled to overtime under the new standard. The agency issued a fact sheet and technical guidance to help with implementation of the rule.

AFS will continue to monitor this new rule and how it will impact metalcasters.