It's Official: Overtime Exemption Threshold to Be $47,476 a Year

The Department of Labor (DOL) today will unveil its new overtime rule, setting an annual salary of $47,476 as the minimum compensation for an employee to be exempt from overtime pay. The current standard is $23,660. Vice-President Joe Biden, who will be touting the new rule at a stop in Columbus, Ohio, today, said: “The middle class is getting clobbered. If you work overtime, you should actually get paid for working overtime.” According to the DOL website, the new rule will:

• Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
• Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
• Strengthen overtime protections for salaried workers already entitled to overtime.
• Provide greater clarity for workers and employers.

In today's Final Rule, the DOL explains the steps to being declared exempt from overtime:

Since 1940, the implementing regulations have generally required each of three tests to be met for the exemptions to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the 'salary basis test'); (2) the amount of salary paid must meet a minimum specified amount (the 'salary level test'); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the 'duties test').

Employers will have until Dec. 1 to implement the new standard.