Understanding The New Overtime Regulations

Today, the U.S. Department of Labor ("DOL") issued the final version of the much-anticipated new Fair Labor Standards Act ("FLSA") regulations regarding the salary threshold for exempt employees. This post provides employers with insight into how to understand, and ultimately apply, the new regulations, which will affect employers of all sizes in all industries across the country.

I. HISTORY OF THE NEW OVERTIME REGULATIONS

The FLSA provides an exemption from the overtime pay requirement for workers employed as executive, administrative, and professional employees ("exempt white-collar employees"). The FLSA also exempts from overtime pay highly compensated employees ("HCEs").

To be exempt, an employee must meet three criteria: (a) the employee must be paid on a predetermined "salary basis" (i.e., the employee's predetermined salary cannot be reduced because of variations in the quality or quantity of work performed); (b) the employee's salary must meet a