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Department of Labor Expands Overtime Protections

A final regulation from the U.S. Department of Labor will extend overtime pay protections to more than 4 million additional employees nationally when it takes effect Dec. 1.

Under the Fair Labor Standards Act (FLSA) of 1938, the vast majority of employers — including hospitals — must provide their employees with overtime pay for working more than 40 hours in a week. There are some exemptions from the FLSA’s protections, including for physicians and attorneys. Certain executive, administrative, professional, computer, and outside sales employees also are exempt under what is  known as the “white collar exemption.” An employee meets the requirements of the white collar exemption and is not subject to the overtime requirements if three conditions are met:

  • Salary basis test: The employee has a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary level test: The employee must be paid at least the minimum weekly amount to be classified as exempt.
  • Duties test: Employment duties must primarily involve executive, administrative, or professional duties as defined in the department’s regulations.

The final rule more than doubles the salary threshold by setting it at the 40th percentile of earnings for full-time salaried workers in the lowest-wage census region. This change raises the threshold from $455 per week to $913 per week, or $47,476 annually. The final rule also allows for the inclusion of nondiscretionary bonuses, incentive payments, and commissions toward up to 10 percent of the salary level test.

In addition to raising the threshold for the white collar exemption, the rule increases the salary level test for “highly compensated employees” (HCEs) to the 90th percentile of earnings for full-time salaried workers, which is $134,004 annually. This is an increase from the current salary level threshold for HCEs of $100,000. Because of their higher salaries, employees who meet the minimum salary amount for HCEs are subject to a less stringent duties test. The department will automatically update the salary level threshold for the white collar exemption and HCEs every three years, beginning on Jan. 1, 2020.

Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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