March 16, 2018

The Minimum Salary to be Exempt from Overtime Pay is Likely to Double

UPDATE: The blog below originally appeared on September 11, 2015.  On May 18, 2016, the federal Department of Labor announced the publication of the final rule which differs, in some respects, from the proposed rule discussed in this blog.  Click here to learn about the final rule.


On July 6, 2015, the United States Department of Labor published a proposed rule that would significantly increase the number of people who are eligible to receive overtime pay.  The DOL estimates almost 5 million workers who currently do not receive overtime pay would be eligible for overtime under the proposed rule.

Under current regulations, which were last updated in 2004, certain employees are exempt from receiving overtime pay.  These white collar exemptions generally apply to individuals in professional, executive and administrative capacities, who: (i) meet various job duty requirements that qualify them for the exemption, and (ii) are paid a salary of at least $23,660 per year ($455 per week).

Under the proposed rule, the salary threshold would be increased to approximately $50,440 per year or $970/week (the exact amount would be based on the 40th percentile of all full-time salaried employees).  In addition, the proposed rule would provide for automatic annual updates of the salary threshold.  For additional information, click here.

Click here to learn about the final rule that was announced on May 18, 2016.  Some of the information contained above is different in the final rule.

Employer Takeaway:

The proposed rule was open for comment through last Friday, September 4, 2015.  With that period now closed, employers should keep an eye out for the final rule, which likely will be issued sometime in 2016.