The Department of Labor issued a final rule that raises the salary threshold for overtime pay, becoming effective on December 1, 2016. This final rule makes two important changes to the current rule regarding overtime: (1) the standard to determine who is eligible for overtime is clearer and (2) more people now qualify for overtime protection.

While the current salary threshold is just $23,660, a 2014 order from President Obama led the Department of Labor to update the threshold to $46,476. Starting in December, anyone making less than $46,476 must receive pay for any overtime hours they work. This new threshold adds protections to 4.2 million workers across the United States. Additionally, the final rule updates the salary threshold every three years, strengthens protections for salaried workers who are entitled to overtime, and clarifies the standard used to determine who qualifies for overtime pay.

Employers can adapt to meet this new standard in numerous ways. One option is to pay workers under the threshold for their overtime work at a rate of time and a half.  The employer alternatively could choose to raise worker salaries so they fall above the new threshold of $46,476. To avoid altering pay whatsoever, employers can shift responsibilities to ensure that all workers only have to work 40 hours per week.

This rule benefits both employers and workers alike—the rules are clearer for employers to follow and provide middle class workers with either more money or more free time. Visit the Department of Labor’s website at https://www.dol.gov/featured/overtime/ or contact our office for more information.