Department of Labor Finalizes Overtime Pay Rule

By Kaelyn Seymour | May 23, 2015

On May 18, 2015, the Department of Labor (DOL) finalized a rule that increases the salary threshold at which employees have to be paid overtime. Under the new rule, individuals who earn salaries of less than $47,476 a year will automatically qualify for overtime pay of time-and-a-half if they work more than 40 hours a week. Previously, those who earned more than $23,660 were exempt from overtime pay.  The new rules will go into effect Dec. 1, 2016.

Under the current law, salaried employees making at least $455 per week and who meet the requirements under the "primary duty" test are exempt from overtime compensation. Under the new rule, the minimum salary threshold will increase to $913 per week. The proposed rule had proposed a threshold increase to $970 per week.

In addition to a change in the rules for lower salary workers, highly compensated employees who pass a minimal duties test are exempt. Under the new rules, the salary minimum for highly compensated employees increased to $134,000, from $100,000.

The final rule does not make any changes to the primary duties test itself.

The golf industry submitted public comments in September of 2015 with specific asks of the Department of Labor concerning the proposed rule.  The industry noted that many golf professionals are paid a salary as well as retain fees from lessons and programs they direct.  The ask of the DOL was to take into account those commissions in the calculations of overall salary. 

For the first time, employers will be able to use nondiscretionary bonuses and incentive payments including commissions, to satisfy up to 10 percent of the standard salary level of $47,476.

Finally, the DOL changed increases to the minimal salary threshold from yearly to every three years, beginning Jan. 1, 2020. Based on wage projections, the threshold is expected to rise to more than $51,000 on Jan. 1, 2020.

It's important to note there will be a six-month phase in period for implementation of the new overtime pay rule.

The golf industry talked to members of Congress and their staff about the impacts of the overtime rule during the ninth annual National Golf Day. Members of Congress were asked to support H.R. 4773 or S. 2707. The Protecting Workplace Advancement and Opportunity Act would ensure the DOL pursues a balanced and responsible approach to updating federal overtime rules. The original sponsors of the legislation were members of the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor, and Pensions.

The Protecting Workplace Advancement and Opportunity Act would:

  1. Prevent DOL from finalizing a proposal that will limit opportunities for employees and place significant burdens on job creators;
  2. Require DOL to fully consider the economic impact of any rule on small businesses, nonprofits, institutions of higher education, and others who will be affected;
  3. Ensure future changes to the salary threshold accurately reflect the economic realities facing workers and employers by making clear automatic increases are not allowed under current law;
  4. Promote transparency and accountability by requiring any changes to the duties tests be made available for public review and comment.

To read the bill, click here.