We knew it was coming, and – while business groups fought hard against it – the much-anticipated Department of Labor Final Rule regarding “white collar” exemptions from minimum wage and overtime requirements is now a reality. The rule, announced by the White House on Twitter last evening, imposes a major increase in the salary threshold for exempt workers. The effect on employers will be equally substantial. The change will require employers to revisit their exempt classifications. Starting December 1, any employee who currently makes less than $47,476 will be automatically eligible for overtime for work performed over 40 hours in a week, regardless of their job responsibilities. That leaves employers with three choices for those workers:
- Increase their annual salary to at least $47,476;
- Pay them time-and-a-half for hours worked over 40; or
- Limit their work to 40 hours or less in a work week.
Industries with large segments of management workers below the new threshold, such as restaurants, retail, hotels, and nonprofits, will be most impacted by this new rule. But all employers should take time to review whether their exempt workers will still be exempt come December 1. If not, choose from among the three options above.
Read on for our full discussion of the Final Rule, including information on anticipated changes to the Executive Duties Test that didn’t make it into the final rule, and the prospects for Congressional efforts to block the rule.