The American Advertising Federation of Montgomery

Fresh Ink

May 26, 2016

Government Alert // Overtime Rules

New Overtime Rules to Take Effect December 1, 2016

Did you know about the U.S. Department of Labor’s release of modified employee overtime pay rules? The new rules, which take effect on December 1, 2016, will have a financial impact on many U.S. businesses including marketing, advertising, and media companies. The Fair Labor Standards Act (FLSA) guarantees minimum wages and overtime pay at a rate of not less than one and one-half times the employee’s regular rate for hours worked over 40 in a workweek. These protections extend to “non-exempt” workers.

The Department of Labor (DOL) has updated the regulations issued under the FLSA revising the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. The exemption, which is referred to as the FLSA’s “EAP” or “white collar” exemption, provides that to be considered exempt, employees must meet certain minimum tests related to their primary job duties and be paid on a salary basis at not less than a specified minimum amount. curreent required for exemption has been $455 a week ($23,660 for a full-year worker). The updated DOL rules will increase the standard salary level required for exemption to $913 a week ($47,476 for a full-year worker). Up to 10% of the new OT obligation can be met using bonus, commission and other incentive compensation. The threshold will automatically adjust on a three-year cycle beginning in 2020. The new rule does not affect the definitions of exemptions (executive, administrative and professional).

The new overtime rules apply to virtually all businesses. The modified overtime pay rules will potentially have a significant impact on your agency’s operations. It is essential for your company to understand the modified overtime rules including the parameters, definitions, implementation elements and time frames as well as going forward aspects of the rules changes. The Federal Register PDF of the Rules to be published by the Department of Labor Wage and Hour Division on 5/23/2016 is available to download here.

More information can be found at the links provided below:

White House Fact Sheet: Overview and Summary of the Rule

Wage and Hour Division Overtime Fact Sheet

Questions and Answers

Private Employer Technical Guidance Document

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