What is the new overtime rule?
The new overtime rule, officially known as the Fair Labor Standards Act (FLSA) Overtime Rule, was implemented by the U.S. Department of Labor in 2016. This rule aimed to extend overtime protections to millions of workers who were previously exempt from overtime pay. The primary goal of the new overtime rule was to ensure that employees who work more than 40 hours per week receive the overtime pay they are entitled to under federal law.
The new overtime rule made several significant changes to the overtime regulations:
1. Salary Threshold: The rule raised the salary threshold for overtime eligibility from $23,660 to $47,476 per year. This meant that any employee earning less than $47,476 annually would be eligible for overtime pay if they worked more than 40 hours in a week.
2. Automatic Adjustments: The rule included provisions for automatic adjustments to the salary threshold every three years, based on the Consumer Price Index (CPI), to ensure that the threshold remains relevant and reflects changes in the cost of living.
3. Duties Test: While the salary threshold was a key component of the new rule, it also maintained the existing duties test to determine whether an employee is exempt from overtime pay. The duties test evaluates an employee’s job duties to determine if they are classified as an executive, administrative, or professional employee.
4. White Collar Exemptions: The rule made adjustments to the white-collar exemptions, clarifying the types of duties that qualify an employee for these exemptions. It also provided additional guidance on the types of responsibilities that must be performed by an employee to qualify for the professional exemption.
Despite these changes, the new overtime rule faced significant opposition and was challenged in court. In November 2016, a federal judge in Texas issued a preliminary injunction that blocked the rule from taking effect. This decision was later upheld by the Fifth Circuit Court of Appeals in 2017.
As a result, the new overtime rule was never fully implemented, and the salary threshold remained at $23,660. However, the debate over the rule continues, and many employers are still considering its implications for their workforce.
In conclusion, the new overtime rule was an attempt to provide additional protections for workers by raising the salary threshold and ensuring that employees who work more than 40 hours per week receive overtime pay. While the rule was ultimately blocked from taking effect, it has sparked a broader conversation about the need for fair labor standards and the rights of workers in the United States.
