June 27, 2022

Volume XII, Number 178

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June 27, 2022

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It’s Overtime Time! Final Rule is Here – Are You Ready?

The wait is over. The US Department of Labor has released the long-awaited Final Rule modernizing the Fair Labor Standard Act’s (FLSA) white-collar exemptions. The good news, for those who have been following the development of the Final Rule, is that there are no big surprises.

What are the changes?  

Expected to require employers to pay overtime to roughly 4.2 million additional US workers, the regulation changes include:

  • Increasing the current minimum salary requirement for the executive, administrative, professional and computer employee exemptions from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), with automatic increases every 3 years to the threshold wage level based on the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census region (currently the South);

  • Increasing the threshold for exemption as a “highly compensated employee” from $100,000 to $134,004, with automatic increases every 3 years to the threshold wage level based on the 90th percentile of weekly earnings for full-time salaried workers; and

  • Permitting up to 10% of the standard salary level to come from non-discretionary bonuses, incentive payments, and commissions paid at least quarterly.

The DOL decided not to make any changes to the duties test at this time. Employer groups strongly lobbied the DOL to not make changes to the various duties tests as any changes would have increased compliance costs.

How much time do I have?

The Final Rule goes into effect December 1, 2016, giving employers more than six months to prepare for the changes.  However, there is no time for procrastination!  The dramatic increase in the salary threshold will require most employers to make some significant changes ensure their organization is compliant.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume VI, Number 139
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About this Author

Jill S. Kirila Labor & Employment Attorney Squire Patton Boggs Columbus, OH & New York, NY & Miami, FL
Partner

Jill Kirila serves as co-leader of the Squire Patton Boggs global Labor & Employment Practice. She combines a focus on results with a client-centric approach to serving clients in a broad range of industries, including technology, retail, manufacturing, healthcare and financial services.

Jill partners with clients to understand their business objectives, see beyond the legal issues and formulate a practical, real-world approach to solving labor and employment problems. She draws on her extensive multistate counseling and litigation experience before federal and state courts and...

614-365-2772
Meghan E. Hill Labor & Employment Attorney Squire Patton Boggs Columbus, OH & New York, NY
Partner

Meghan Hill’s clients benefit from her holistic approach and ability to incorporate their goals and objectives when working to prevent and solve employment law problems. Meghan’s big-picture view allows her to understand all ramifications employers face when dealing with issues, as well as identify broader issues outside of employment. Meghan works with numerous diversified industrial companies and has a growing healthcare client base.

Meghan regularly represents companies in complex litigation and wage and hour collective and Rule 23 class actions in federal courts, including...

614-365-2720
Shennan Harris Employment Attorney Squire Patton Boggs Columbus, OH
Associate

Shennan Harris helps employers solve – and prevent – problems through efficient, effective, personalized representation and counseling.

Shennan excels at efficiently and effectively managing all aspects of the litigation process and thinking outside the box to resolve tough problems. She represents clients in all aspects of complex litigation and arbitration, including class actions and in state and federal trial and appellate courts, as well as helps employers resolve charges of discrimination and other disputes before administrative agencies...

614-365-2791
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