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Overtime Regulations Changes 

Update: Nov 22, 2016

Federal Judge Amos L. Mazzant of Texas entered a temporary injunction that postpones the December 1, 2016 implementation date of the Fair Labor Standards Act. This applies across the United States. You can read the decision here and the summary here

On May 18, 2016, U.S. Labor Department announced overtime final regulations that, when they go into effect on December 1, 2016, will mean that many employees earning less than $913 per week ($47,500 annually) will be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers. The final rule applies to employers in all sectors, but in an effort to address longstanding confusion about how the Fair Labor Standards Act (FLSA) and the overtime regulations apply to nonprofit employers and employees, the Department of Labor (DOL) also published a special overview and guidance for nonprofit organizations. 

Nonprofits with budget years ending on June 30 will need to develop new budgets for the fiscal year beginning in six weeks that take these new changes into account. Nonprofits with budget years ending on December 31 have more time to adjust and plan for 2017. 

Listen to the recording here.

Key Takeaways

  • Salary Level Threshold: The new regulations will raise the standard minimum level for salaried, exempt workers from $455 per week ($23,660 per year) to $913 per week ($47,476 per year) 
  • Effective Date: December 1, 2016. The new rule does not phase in the higher salary thresholds over a longer period of time, as had been requested by many commentators during the rule-making process
  • Automatic Increases: The final rule establishes a mechanism for automatically updating the salary and compensation levels every three years, with the first update to take place in 2020
  • Enterprise Coverage: All employees of an organization will be covered by the FLSA and overtime regulations if the entity has annual revenues of at least $500,000, measured by volume of sales made or business done. 
  • Individual Coverage: Even if the employer does not meet the standard for “enterprise coverage,” an individual employee will be covered by the FLSA if he or she engages in interstate commerce or in the production of goods and services for interstate commerce. This can include such activities as regularly making out-of-state phone calls, receiving and sending mail or email, ordering goods from out-of-state suppliers (such as Amazon), and handling credit card transactions 

U.S. Department of Labor Resources

Compliance Resources