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Regulation and Compliance > Federal Regulation > DOL

DOL finalizes sweeping overtime pay change

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WASHINGTON — The salary threshold for those entitled to overtime pay will double under a new Department of Labor rule scheduled to go into effect in December.

The regulation, which was unveiled in May by the DOL, has been finalized. It will extend overtime protections to 4.2 million workers within the first year of its implementation.

Related: What to know about proposed overtime changes

It does so by raising the salary threshold under which most white collar salaried workers are eligible to receive overtime pay from, $455 a week (or $23,660 a year) to $913 a week (or $47,476 a year).

It also strengthens overtime protections for salaried workers already entitled to overtime, and provides greater clarity for workers and employers, DOL officials said.

The Overtime Final Rule aims to more easily identify workers, via a salary level test, who are truly exempt from overtime under the Fair Labor Standards Act (FLSA), according to officials at the Avitus Group, based in Denver.

According to the DOL, 4.2 Million U.S. white collar EAP  or executive, administrative and professional workers  are expected to be reclassified or receive salary increases.

They will either gain new overtime protections or get a raise to the new salary threshold.

According to studies by the DOL, more than half (56 percent) are women, which translates into 2.4 million women either gaining overtime protections or getting a raise to the new threshold as a result of the rule.

DOL officials said they also found that more than half ( 53 percent)  of affected workers have at least a four-year college degree, and more than 3 in 5 (61 percent) are age 35 or older. What’s more, 1.5 million are parents of children under 18, which translates into 2.5 million children seeing at least one parent gain overtime protections or get a raise to the new threshold.

“Those employees must pass a minimal duties test and essentially the salary level is bumped from $100,000 to $134,000 annually,” Ryan Braley, Avitus Group director of human resources & risk management.

The overtime final rule is effective Dec. 16 and requires companies to update the salary levels every three years.

In addition to the standard salary level doubling from more than $23,000 to more than $47,000, those employees who pass a minimal duties test may see their salary level jump from $100,000 to $134,000 annually, Braley said.

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