May 31, 2016

U.S. DOL Expands Overtime Pay Eligibility Nationwide

The United States Department of Labor (DOL) recently issued a final rule that will expand eligibility for overtime pay for workers across the country. This sweeping rule updates federal regulations under the Fair Labor Standards Act, or the FLSA, and will go into effect on December 1, 2016.

The FLSA requires employers to compensate eligible employees for any overtime worked, which is any time in excess of 40 hours per workweek. Prior to the rule, only employees with annual salaries below $23,660 were entitled to overtime pay. Under the new standards, the salary threshold increases significantly, and employees with an annual salary below $47,892 may be eligible. Overtime must be paid at a rate of “time and one half” of the employee’s usual compensation. This salary adjustment is the first of its kind since 2004, and is expected to expand eligibility to an additional 4 million employees.

Some exceptions still apply. Executive, administrative, professional and outside sales employees are generally ineligible for overtime pay under the FLSA. Other, highly compensated individuals may also be exempt. Courts apply certain standards to determine eligibility, which consider the employee’s job duties and salary. An employee’s job title, by itself, does not determine eligibility. The FLSA and its regulations also provide specific standards to calculate an employee’s workweek.

The FLSA provides a complex framework for employee compensation. In Pennsylvania, the Minimum Wage Act and Wage Payment Collection Law may also apply. Employers or employees with questions about this recent rule change, overtime pay, or compensation are encouraged to contact Eastburn and Gray’s Labor and Employment practice group.

Author: Erin N. Kernan

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