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DOL Proposes New Overtime Rules

July 14, 2015

On June 30th, the US Department of Labor (DOL) released a Notice of Proposed Rulemaking (NPRM) focused on updating overtime salary and compensation levels. The NPRM extends overtime protections and overtime pay to most salaried workers earning less than the new threshold of $50,440.

The NPRM implements President Obama’s Memorandum that was issued over a year ago to increase overtime pay. The Memorandum directed the DOL to update the regulations defining which white collar workers are eligible to receive pay for hours worked over 40 in a workweek.

In response, the NPRM raises the salary threshold that businesses will use to determine whether employees are exempt from being paid overtime, simplifies the identification of nonexempt employees, and creates a process to automatically update compensation thresholds.

Under the Fair Labor Standards Act (FLSA), if a worker earned less than the current salary threshold of $23,660 per year, they are automatically qualified for overtime pay if they work more than 40 hours a week. This previously set threshold is below poverty level for a family of four and has been eroded by inflation, leaving a large percentage of workers “exempt” from earning overtime pay.

The Notice of Proposed Rulemaking (NPRM) was published on July 6, 2015 in the Federal Register (80 FR 38515) and interested parties are invited to submit comments on the proposed rule at on or before September 4, 2015.