Current Rules for Overtime Pay

Under current federal statute, most businesses must pay certain employees 1.5 times their hourly rate for overtime, anything more than 40 hours per week.

The statute specifically exempts certain employees from overtime pay based on their job type.

Exemptions by job type include executive, administrative, professional employees, outside sales representatives, teachers, and academic administrative personnel.

Federal Regulations

Current federal regulations require additional conditions to meet the exemption for these job types. These conditions include:

  • Earning a minimum of $455 per week;

AND

  • For executives employees, has the primary duty of managing the enterprise.
  • For administrative employees, does work directly related to the management of the business using the employee’s own independent judgment.
  • For professional employees, does work that requires specialized knowledge or creativity.

Federal regulations have an exemption for highly compensated employees whose job type qualifies under the “minimal duties” test.

This exemption applies to employees who earn a minimum of $100,000 per year.

New Rules for Overtime Pay

On May 18, 2016 the United States Department of Labor published new regulations changing the requirements for the professional and highly compensated employee qualifications.

Effective on December 01, 2016:

  • the new minimum for executive, administrative, and professional employees to qualify for the exemption will be $913 per week ($47,476 per year)
  • the new minimum for highly compensated employees to qualify for the exemption under the minimal duties test will be $134,004 per year

Take Away

Administrative, executive, and professional employees that have certain duties and paid less than $47,476 per year will qualify for overtime.

Administrative, executive, and professional employees who meet the “minimal duties” test and are paid less than $134,004 per year will qualify for overtime.

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