President Obama Updates Overtime Rules for Salaried Employees

In 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the Fair Labor Standards Act’s (FSLA) minimum wage and overtime standards. With a goal of ensuring workers are paid a fair day’s pay for a hard day’s work, the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA’s intended overtime protections are fully implemented.

Currently, there is an exemption from overtime rules for white collar workers where:

  • the employee is paid on a salary basis not subject to reduction based on quality or quantity of work (“salary basis test”) rather than, for example,on an hourly basis;
  • their salary must meet a minimum salary level (“salary level test”); and
  • the employee’s primary job duty must involvethe kind of work associated with exempt executive,administrative, or professional employees (the“standard duties test”)

In May the Department of Labor finalized the Overtime Rule to update the threshold for the salary level test from under $23,660 per year to $47,476 (as well as mandating an update every three years to keep up with inflation).  The President summarized the rule in his weekly address.

The new rule will take effect December 1, 2016.



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