New Labor Standards Act for new overtime exemption rules

Oct 11, 2016

Your Chamber and The Fair Standards Labor Act The Department of Labor new overtime rule takes effect in December. Do you know how it will affect your Chamber? The Fair Labor Standards Act (FLSA) is a new overtime exemption rule issued by the Department of Labor (DOL) and takes effect December 1, 2016. The new rule doubles the exempt employee annual salary threshold from $23,660 to $47,476. The DOL estimates that the change will impact 4.2 million workers. What does it mean? Employees who earn less than $47,476 must be converted to nonexempt status and paid overtime wages. For example, in exchange for working extra hours one week, a salaried employee can leave work early the next week for a parent-teacher conference — without having to take sick leave or vacation time.
Nonexempt employees cannot be afforded the same flexibility. If they work for more than 40 hours in a week, they must be paid overtime. The hours worked in excess of 40 one week cannot be offset by taking time off the next week. What’s next? There is a lot of conversation about the FSLA — both positive and negative. Regardless of where your organization and community stands on it, it’s critical for Chambers to understand the rule. It will likely impact the Chamber itself, but more importantly, it will impact their members. Chambers across the US are offering trainings for members, to help member businesses understand the requirements and how to implement them. Start researching how FSLA will impact your Chamber and your member businesses. There are a number of resources available. The Overtime Rule

In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act, and to simplify and modernize the rules so they’re easier for workers and businesses to understand and apply. The department has issued a final rule that will put more money in the pockets of middle class workers – or give them more free time.

The final 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.

The final rule will become effective on December 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.     


IN RESPONSE TO THE NEW OVERTIME RULE, EMPLOYERS CAN: A) Pay time-and-a-half for overtime work. B) raise workers' salaries above the new threshold. C) Limit workers's hours to 40 per week. D) Some combination of the above.



Overtime updates will extend protections to 4.2 million workers across the the county.

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