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United States Department of Labor Raises Salary Thresholds for Overtime Exemptions

On May 17, 2016, the White House and the United States Department of Labor announced the finalization of the long-anticipated rule increasing the salary thresholds for most employees who currently are exempt from overtime pay. The new threshold, which goes […]


United States of American Department of LaborOn May 17, 2016, the White House and the United States Department of Labor announced the finalization of the long-anticipated rule increasing the salary thresholds for most employees who currently are exempt from overtime pay. The new threshold, which goes into effect on December 1, 2016, increases the minimum salary for full-time exempt employees from $455 per week to $913 per week ($47,476 per year). Under the final rule, the new salary threshold will be adjusted for inflation every three years, beginning January 1, 2020.

Also being adjusted effective December 1, 2016 is the salary threshold for “highly compensated employees” who are subject to a streamlined test for exemption from overtime rules.  That threshold rises from the current $100,000 per year to $134,004 per year. The final rule also allows up to 10 percent of the salary threshold for non-highly compensated exempt employees to be met by nondiscretionary bonuses, incentive pay or commissions, provided these payments are made on at least a quarterly basis.

Please keep in mind that the other parts of the exemption rules remain in effect: In order to be exempt from overtime, employees will still have to meet the duties tests (i.e., perform exempt work, such as managerial, professional or administrative) and most must be paid on a salaried basis, in addition to meeting the new salary threshold. The Department of Labor has summarized its new rule at the following LINK.

For questions or further clarification regarding this ruling, please contact Labor, Employment & Civil Rights Department Chair Brandon W. Zuk at 517.377.0831 or bzuk@fraserlawfirm.com, attorney Michael E. Cavanaugh at 517.377.0812 or mcavanaugh@fraserlawfirm.com, or attorney Aaron L. Davis at 517.377.0822 or adavis@fraserlawfirm.com.