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Business and Policy Areas
Business and Policy Areas

New Overtime Rules Proposed

July 13, 2015

Following the executive order signed by President Obama last year aimed at expanding overtime, the Department of Labor (DOL) published a July 6 notice of proposed rulemaking (NPRM) that makes changes to the overtime provisions of the Fair Labor Standards Act (FLSA).

Current regulations set the threshold for when an individual qualifies as a salaried worker exempt from overtime pay requirements at $455 per week or $23,660 annually. Under the proposed rules, the threshold will be raised to the 40th percentile of weekly earnings for full-timed salaried workers, which, based on 2013 data, is $921 per week or $47,892 annually. DOL estimates that for 2016 the annual threshold will be $50,440.

DOL further proposed an automatic annual increase of the minimum salary amount either by tying it to the 40th percentile or indexing the weekly amount to the Consumer Price Index.

Regarding the standard duties test for distinguishing executive, administrative, and professional employees, the department did not include a specific proposal to modify the tests, but seeks comments on whether the standard duties tests are working as intended to screen out employees who are not bona fide exempt employees.

Comments on the proposal must be submitted by September 4.

DOL has created an overtime resource page, including a fact sheet on the proposed rule.


Mary Bachinger
Director, Tax Policy