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On May 18, 2016, the U.S. Department of Labor issued its final version of the overtime exemption rule applicable to white collar employees. The rule exempts from the Fair Labor Standards Act’s overtime requirements employees earning above a set salary threshold per year. The new version promulgated by the Department of Labor significantly raises that salary threshold to the new figure of $47,476. The current threshold is only $455 per week, or $23,660 per year. As such, the threshold is set to more than double. The salary threshold for the white collar exemption has not been adjusted since 2004.
The increase may result in more than four million employees switching from exempt to non-exempt status. Previously exempt employees earning below the salary threshold will be entitled to overtime wages to which they were not previously entitled.
The new rule, with its heightened threshold, will go into effect on December 1, 2016. As such, employers have several more months to evaluate whether currently exempt employees will remain exempt in light of the new threshold.