The New Overtime Rules: What You Need To Know

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US Department of Labor announced new overtime rules that will automatically extend overtime pay eligibility to 4.2 million workers. On May 18, 2016, The Department of Labor published final overtime rules changes. The effective date of the following rules is December 1, 2016.

Key Elements of the new regulations that you need to know:

  1. Salary Threshold
    • The standard salary threshold has increased from $455.00 per week to $913.00 per week, or $47,476.00 annually.
    • Highly Compensated Employees (HCE) salary level has increased from $100,000.00 to $134,004.00 per year.
  2. The DOL will update the salary threshold every three years beginning 1/1/2020.
  3. The final rule allows for up to 10 percent of the salary threshold to be met by non-discretionary bonuses, incentive pay or commissions, provided these amounts are paid on at least a quarterly basis.
  4. The final rule does not make any changes to the duties test that determines whether an employee is ineligible for overtime pay.


In response to the new rules, employers have the following options:

  1. Pay time-and-a-half for overtime work.
  2. Raise employee’s salary above the new threshold ($913.00 per week).
  3. Limit an employee’s hours to 40 hours per week.
  4. Some combination of the above.


How do I know if my employee should be paid overtime?

If an employee has worked more than 40 hours in a pay week, then the employee must be paid an overtime rate for all hours over 40. However, some employees may be exempt from the overtime pay provisions, such as employees employed as bona fide executive, administrative, professional, outside sales employees and certain computer employees. To qualify for exemption, employees must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week, or $913 per week effective 12/1/2016. Please visit this guide to determine if your employees are exempt from overtime.

How can I keep track of my employee’s hours?

Priority One Payroll does offer Time & Attendance solutions. Please contact your Customer Service Specialist for more information.

For more information, please visit the US Department of Labor.