Changes to Overtime Pay Requirements for Salaried Employees

August 5, 2016

Does your business employ salaried white collar workers? Do any of them make less than $47,476 per year?

If you answered yes to both questions, this change will affect your business.

The Fair Labor Standards Act requires all employers to pay employees (including salaried employees) time and a half for hours worked over 40 hours per week, unless the employee is exempt. An employee is exempt from overtime pay if they meet BOTH of the following requirements:

  1. The employee is a bona fide executive, administrative, professional or outside sales employee.
  2. The employee’s salary is at or above the weekly salary threshold.

Currently, the weekly salary threshold is $455 a week ($23,660 per year). However, in 2014, President Obama directed the Secretary of Labor to update the overtime regulations. As a result, effective December 1, 2016, the new salary threshold will be $913 a week ($47,476 per year).

Additionally, this new rule calls for an automatic update of the salary threshold every three years based on wage growth over time.

Written by Samantha McCallister, CPA