Under a new rule announced by the White House last month (May, 2016), effective December 1, 2016, anyone earning a salary of less than $47,476 ($913/week) will automatically qualify for overtime pay when they work more than 40 hours a week. Currently the threshold is at $23,660. The new rule is intended to expand access to overtime pay to salaried workers working long hours under exemption rules. The new threshold will be updated ever 3 years to keep the threshold at the 40th percentile of full-time salaries in the lowest income region of the country.
Highlights about the new rule include:
Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest wage Census Region, currently the South, which is $913 per week or $47,476 annually for a full -year worker;
Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full -time salaried workers nationally, which is $134,004; and
Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.