Labor Department: New salary threshold for overtime pay

U.S. Labor Department rules on overtime pay

The Wage and Hour Division of the U.S. Labor Department today released for publication in the Federal Register a final rule and an announcement of policy concerning overtime pay.

Related content

As explained in the announcement of policy [PDF 292 KB], the final rule revises the regulations implementing an exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. These exemptions are frequently referred to as the “white collar” exemptions. To be considered exempt from overtime pay, employees must meet certain minimum requirements related to their primary job duties and, in most instances, must be paid on a salary basis at not less than the minimum amounts specified in the regulations. 

Today’s final rule [PDF 1.96 MB] updates the salary level above which certain white collar workers may be exempt from overtime pay requirements from the previous level of $455 per week (the equivalent of $23,660 per year) to a new level of $913 per week (the equivalent of $47,476 per year). 

The final rule is effective December 1, 2016, so as to provide employers sufficient time—more than 180 days—to make changes that are necessary to comply with the final regulations.

The final rule and the related announcement of policy will be published in the Federal Register on May 23, 2016.

KPMG observation

Overtime payments are subject to income and employment tax reporting and withholding. Thus, employers will want to adjust their payroll systems and make other appropriate adjustments during the 180-day effective date delay.

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG's new digital platform