New Overtime Regulations Take Effect Aug. 23
Long-awaited and controversial changes to regulations governing overtime compensation will take effect on August 23.
The Department of Labor (DOL) issued the 536-page final rule on April 20. The rule revises the salary and duties tests used to determine who is eligible to receive mandatory overtime pay under the Fair Labor Standards Act (FLSA). To be exempt from those mandates, an employee must (1) be compensated above a specified “minimum salary level,” (2) be paid on a “salary basis,” and (3) perform specified primary “job duties” involving managerial, administrative, or professional skills.
The new regulations change the minimum salary level from $155 a week or $8,060 a year to $455 a week or $23,660 a year. They replace the “long” and “short” duties tests with a single “standard duties” test for executive, administrative, and professional employees, and establish a separate test for highly-compensated employees (those individuals earning more than $100,000 per year). Some changes were also made to the special exemptions for computer professionals and for outside sales employees. New provisions were added to specify that employees in certain occupations are categorically entitled to overtime pay. Among those are “manual laborers or other ‘blue collar’ workers.” The rule states that “nonmanagement employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the Fair Labor Standards Act, and are not exempt under the regulations in this part no matter how highly paid they might be.”
The new rule is not expected to have a major impact on the construction industry. However, contractors are advised to review their classifications and practices to ensure that they were in compliance with the FLSA to begin with and that the new rule does not require any changes. Contractors should also keep in mind that state laws may also apply.
For a copy of the new rule, click here. For further guidance on the rule, click here and scroll down to "Fair Labor Standards Act." An article on this topic is also planned for publication in the November issue of AGC’s CONSTRUCTOR Magazine.
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