A federal court issued a preliminary injunction on Nov. 22 to stop the 2016 rule from going into effect on Dec. 1. The U.S. Department of Labor is appealing this decision.
Dependng on the outcome of this case, it's possible that the new overtime rule could be delayed from going into effect for weeks or months or could be stopped entirely.
We will post updates on our website when they are available. For more information, visit the National Council of Nonprofits' webpage on the overtime final rule.
Final 2016 Rule
Video was created by Department of Labor (DOL).
The U.S. Department of Labor released its Final Rule on overtime pay regulations for employees covered by the Fair Labor Standards Act (FLSA).
FLSA coverage applies to employees who work for certain "enterprises" (businesses or organizations) or regularly engage in interstate commerce.
Effective December 1, 2016, the rule changes the salary level but not the duties test for exempt employees.
- Setting the minimum salary level for exempt full-time workers at $913 per week or $47,476 per year (40th percentile of full-time salaried workers).
- Setting the total annual compensation requirement for highly compensated employees (HCE) at $134,004 (90th percentile of full time salaried workers).
- Automatically updating salary and compensation levels every three years to maintain wages at these percentiles.
Nationally, 8 percent of employees are automatically eligible for overtime pay based on their salary amounts (4 million workers nationwide, 73,000 in Colorado).
- 90 percent of this salary level must be paid weekly.
- 10 percent may be paid through nondiscretionary bonuses, incentive pay, or commissions on at least a quarterly basis.
- One pay period will be given after the quarter to make up any shortfall.
Guidance for Nonprofits
Nonprofits should plan for any changes to employees’ wages in their 2017 budgets.
Background and Exemption Information
For an employee to be exempt from overtime pay, DOL regulations have required three tests to be met:
1. The employee must be paid a predetermined and fixed salary that is not reduced based on changes in the quality or quantity of work performed.
2. The amount of salary paid must meet a minimum specified amount (Prior to Dec. 1, 2016, this is $455 per week/$23,660 for a full year).
3. The employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations
Additional resources on final rule and coverage
- National Survey of Nonprofits on Overtime Rule Change
- North Carolina Center for Nonprofits- Tips for Planning
- Independent Sector's Updates on Overtime Rule
- Classifying employees correctly