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Volume 28; Fair Labor Standards Overtime Requirements

Posted by Admin Posted on Oct 13 2016



Written by: Natasha Swan, Executive Assistant               

On May 18th the Department of Labor released the Final Rule on overtime that increased the thresholds for overtime rules, expanding the number of employees eligible for overtime pay. Here is an overview of the new mandates:


  • Under the Fair Labor Standards Act (FLSA), employees who work more than 40 hours in a week are entitled to overtime pay, unless they meet the requirements of certain wage and duties tests.


  • The Salary level for exempt employees (non-overtime eligible employees) will increase to $47,476 annually ($913 per week) (from the current $23,660 annually) on December 1st, 2016.


  • To qualify for exemption status, a white collar employee(exempt employee) generally must:
    • Be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
    • Be paid more than a specified weekly salary level, which is $913 per week
    • Primarily perform executive, administrative, or professional duties, as defined in the department’s regulations (the duties test)


  • Employers will be required to implement the updated salary level requirements via:
    • Increasing the salary of any employee who meets the duties test to at least the new salary level ($47,476 annually) to retain his or her exempt status
    • Pay an overtime premium of one and a half times the employee’s regular rate of pay for any overtime hours worked
    • Reduce or eliminate overtime hours- Some employers will use this option to reduce the burden of increase wages
    • Reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime for hours worked over 40 in the workweek, to hold total weekly pay constant.


  • The FLSA rules encompass businesses with 2 or more employees, however coverage isn’t solely determined based on the number of employees.

    Generally, employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more are covered by the FLSA. In addition, employees of certain entities are covered by the FLSA regardless of the amount of gross volume of sales or business done. These entities include: hospitals; businesses providing medical or nursing care for residents; schools (whether operated for profit or not for profit); and public agencies.

    Even if an employer is not covered on an enterprise-wide basis, employees may be individually covered by the FLSA if their work regularly involves them in commerce between States (“interstate commerce”). The FLSA covers individual workers who are “engaged in commerce or in the production of goods for commerce.

Companies have until December 1, 2016, to make determinations on which employees to reclassify as nonexempt and implement the changes.

Employers should have documentation on how they determined any status changes and should discuss changes with employees before changes are put into effect.

For more information or further questions please visit the DOL's Final Overtime Rule webpage. Or, feel free to reach out to one of our tax professionals at any time.



The due dates for tax returns on extension are growing near. If you have a return on extension and we will be preparing the return, please have your tax preparation information to us as soon as possible so we may complete in a timely manner for you.

Here is a recap of important tax due dates to keep in mind for the remainder of the year: 

  • October 17, 2016 - 2015 Form 1040 due date, if extended
  • January 16, 2017 - 2016 4th quarter estimate payment due              

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Becker and Rosen CPAs, LLC Disclaimer

This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions. 

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