Overtime Provisions in the Fair Labor Standards Act (FLSA): Frequently Asked Questions

Summary

The Fair Labor Standards Act (FLSA), enacted in 1938, is the main federal legislation that establishes general wage and hour standards for most, but not all, private and public sector employees. Among other protections, the FLSA establishes that covered nonexempt employees must be compensated at one-and-a-half times their regular rate of pay for each hour worked over 40 hours in a workweek.

The FLSA also establishes certain exemptions from its general labor market standards. One of the major exemptions to the overtime provisions in the FLSA is for bona fide executive, administrative, and professional employees (the “EAP” or “white collar” exemptions). The FLSA grants authority to the Secretary of Labor to define and delimit the EAP exemption “from time to time.” Under current regulations (established in 2004), to qualify for this exemption from the FLSA’s overtime pay requirement, an employee must be salaried (the “salary basis” test), must perform specified executive, administrative, or professional duties (the “duties” test), and must earn above a salary level threshold (the “salary level” test), which is currently set at $455 per week.

The Secretary of Labor published a Notice of Proposed Rulemaking (NPRM) in July 2015 to make changes to the EAP exemption. The major changes in the NPRM are raising the salary level threshold from the current $455 per week to $970 per week and linking the threshold going forward to a measure of inflation. The NPRM does not propose changing the duties and responsibilities that employees must perform to be exempt. Thus the NPRM would affect EAP employees at salary levels between $455 and $970 per week in 2016. The Department of Labor (DOL) estimates that about 14.7 million workers would be affected, including about 4.7 million EAP employees who would become newly entitled to overtime pay.

This report answers frequently asked questions about the overtime provisions of the FLSA, the EAP exemptions, and the NPRM that seeks changes to the EAP exemption.