Update to Federal Regulations Regarding Overtime Pay Eligibility

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FinerfrockBy Bill Finerfrock, Capitol Associates

On May 18, President Obama and Secretary of the Department of Labor (DOL) Thomas Perez announced the publication of the Department of Labor’s final rule to drastically alter regulations regarding overtime payment. Any salaried employees who made between $23,660 and $47,476 must now begin to receive overtime pay.

The rule shifts the qualification for overtime pay eligibility to now include all individuals with a standard salary level of the 40th percentile of full-time salaried workers: $47,476. The standard salary level had previously not been updated since 2004, and until the final rule the threshold for overtime eligibility for salaried employees stood at the annual mark of $23,660.

The final rule will expand overtime payment benefits (1.5x payment for all hours worked beyond 40) to a projected 4.2 million workers, and will come into effect on December 1, 2016. The standard salary level thresholds are to be automatically updated every three years, starting January 1, 2020.

To be clear:
Non-Exempt = Hourly employees
Exempt = Salaried employees

Based on median salary, the rule is most likely to effect the following individuals in the healthcare provision field:

  • Medical and pharmacy technicians;
  • Medical and physical therapist assistants;
  • Nurses; and
  • Paramedics.

The DOL estimated the rule will directly affect roughly 200,000 hospital workers and 300,000 non-hospital healthcare workers. The rule will temporarily exclude Medicaid-funded home health providers or healthcare facilities with no more than 15 beds.

Of note, any bonuses an employee receives are included in the $47,476 figure.

Bill Finerfrock is the president and owner of Capitol Associates, a government relations/consulting firm. Prior to assuming ownership of Capitol Associates, Bill was a senior vice president in the company for more than 20 years. Capitol Associates was recently selected to work with AHRA on their regulatory affairs issues. Bill specializes in health care financing, health systems reform, health workforce and rural health. He can be reached at bf@capitolassociates.com.


  1. So, if you are an EXEMPT employee making $47,476 or less, you will get overtime pay for every hour you work over 40 hours per week?

  2. The distinction between an “exempt” and “non-exempt” employee can sometimes be confusing. The fact that an employee is “salaried” does not necessarily mean they are classified as an “exempt” employee. Accordingly, the duties test must be met even if the employee’s salary exceeds the standard salary level. For more information, See Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA): https://www.dol.gov/whd/overtime/fs17a_overview.pdf . Hope this helps.


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