By Danielle Capilla
Chief Compliance Officer at United Benefit Advisors
After a long wait, the Department of Labor (DOL) has released the revisions to the white collar overtime exemption rules in the Fair Labor Standards Act. The new rule becomes effective on December 1, 2016.
Generally speaking, the Fair Labor Standards Act applies to employees of “enterprises.” Enterprises are:
- A federal, state, or local government agency
- A hospital; or an institution primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who live on the premises (it does not matter if the hospital or institution is public or private or is operated for profit or not-for-profit)
- A pre-school, elementary or secondary school or institution of higher learning (e.g., college), or a school for mentally or physically handicapped or gifted children (it does not matter if the school or institution is public or private or operated for profit or not-for-profit)
- A company or organization with annual dollar volume of sales or receipts in the amount of $500,000 or more
Employees may still be covered even if an employer isn’t an enterprise, due to interstate commerce requirements.
Non-exempt, or “overtime eligible,” workers in the United States are entitled to time-and-a-half pay for their hours worked after 40 hours in a week. Some specific jobs are considered exempt, such as airline employees, farmworkers, seamen on American vessels, switchboard operators, and executive, administrative, professional and outside sales employees who are paid on a salary basis.
The “white collar” or “EAP” exemption covers executive, administrative, professional, outside sales, and computer employees. The white collar exemption salary level was last set in 2004 at $455 a week or $23,660 a year. That salary level is now below the federal poverty level for a family of four. The new standard is $913 a week or $47,476 annually.
For information on how a white collar employee qualifies for an overtime exemption—as well as the threshold for highly compensated employees and how to calculate salary—download UBA’s Compliance Advisor, “Overtime Exemption Rules Arrive”.