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U.S. Department of Labor (DOL) Announces Publication of Final Rule on Overtime in the Fair Labor Standards Act (FLSA)

May 31, 2016

On May 18, 2016, President Obama and Labor Secretary Perez announced the publication of the Department of Labor’s Final Rule on overtime exemptions under The Fair Labor Standards Act (FLSA). Under FLSA, employers are required to pay most employees overtime pay for hours worked in excess of 40 hours per week. However, certain employees whose income falls above a certain minimum threshold are exempt from overtime pay, which is frequently referred to as the “Executive, Administrative, Professional” (EAP) or “white-collar” exemption. The Final Rule would double the minimum income threshold for exemption from $23,660 annually to $47,476, providing the right to overtime pay to 4.2 million white collar workers. The Final Rule would also set the Highly Compensated Employee (HCE) income threshold, previously at $100,000 a year, at $134,004 per year. Employees with salaries above this threshold are exempt from overtime rules regardless of job duties. 

The Final Rule also factors inflation and economic change into the regulations. It establishes a mechanism for updating the income thresholds for both categories every three years to account for inflation and to ensure that they continue to be effective. 

Many of these regulations may have an impact on service professionals with disabilities and those who provide people with disabilities with supports and services, including services that people with disabilities need to maintain employment. Even when schedules are designed to avoid overtime work through the use of multiple providers working in shifts, people with disabilities may require their providers to work overtime. In order to avoid service disruptions, states must evaluate their overtime policies and ensure that they have allocated adequate budgetary resources for overtime worked by LTSS providers who were previously exempt from the overtime rule. This change has the potential to significantly alter the way in which professional workers are assigned hours and compensated. 

For more information, read the Department of Labor’s extensive list of resources on the Final Rule and the Federal Register entry on the Final Rule