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Obama Increases Minimum Salary Level for Overtime Pay

At the direction of President Obama, the U.S. Department of Labor (DOL) issued a proposed rule on June 30, that would change federal overtime exemptions for administrative, executive, professional, and computer professional employees—the so-called "white collar" worker classifications that have long been exempt from being paid time-and-one-half for working hours over 40 per week.  

DOL’s proposed rule will affect both public and private work by all employers who are covered by the Fair Labor Standards Act (FLSA), which includes the vast majority of construction contractors, subcontractors and suppliers. The proposal includes increasing the minimum salary level to the 40th percentile of weekly earnings for full time salaried workers, which the DOL estimates at $50,440 for 2016.The current salary threshold is $23,660 a year. 

DOL proposes to automatically update the salary and compensation levels on an annual basis to the 40th percentile or by indexing the $921 number to the Consumer Price Index for all Urban Consumers (CPI-U). DOL is also considering whether to allow nondiscretionary bonuses, such as certain production or performance-based bonuses, to satisfy a portion of the standard salary test requirement. The proposal does not make any changes to the standard duties test; however, the Department is seeking comment on whether the current tests are working as intended to screen out employees who are not bona fide white collar exempt.  

Once the proposal is published in the Federal Register the public will be given 60 days to submit written comments. For more information on the overtime proposal please visit DOL’s resource page


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