Legal Insider: DOL Expands Annual Salary Overtime Threshold

John V. Berry May 31, 2016 at 1:15pm

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Plaza America that specializes in federal employee, security clearance, retirement, and private sector employee matters.

On May 18, 2016, the Department of Labor (DOL) issued a final rule making millions of middle-class workers eligible for overtime pay for the first time.

The new DOL rule, which was last updated more than 10 years ago, is set to go into effect on Dec. 1, 2016. A lot of things have changed in the time since the last revisions with respect to wages and inflation. By far, the most significant change in the new regulation is that the DOL has doubled the annual salary threshold that determines overtime pay eligibility.

Prior to the new rule, workers who earned more than $23,660 a year were not eligible for overtime pay, which is time and one-half of a worker’s regular hourly rate of pay, if they worked beyond 40 hours in a workweek and performed certain executive, professional, or administrative duties. The new DOL rule leaves the existing duties test in place but increases the annual salary threshold to $47,476. It is estimated that the new regulation will extend overtime pay to over four million workers around the country by next year.

In addition, the new annual salary threshold of $47,476 is expected to rise to more than $51,000, based on wage growth, when the first scheduled update occurs on Jan. 1, 2020. The DOL plans to automatically increase the annual salary threshold every three years after implementation.

The move by DOL has received significant press coverage and many employers are working toward implementing the new rule. Eligible workers will likely be provided more information from their employers before the new rule goes into effect.

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