The Fair Labor Standards Act is the federal law applicable to overtime compensation for employees. The U.S. Department of Labor (USDOL) announced this week that the overtime rule changes it proposed in 2015 will become effective on December 1, 2016. After the changes were proposed in 2015, the USDOL received 270,000 comments.

The new rule, which becomes effective on December 1, 2016, includes the following changes in the currently effective overtime rules:

1. The currently effective salary test to be exempt from overtime compensation eligibility, as long as all other applicable “duties tests” are also met, is $455 per week, which equates to a $23,600 minimum annual salary. Under the new rule, the salary test will increase to $913 per week, or a $47,476 minimum annual salary.
2. Under the new rule, employers may use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new salary exemption level.
3. The total annual compensation requirement for the highly compensated employees overtime exemption, subject to a minimal “duties test,” will be raised from $100,000 to $134,004 under the new rule.
4. The new rule establishes a mechanism every three years, beginning on January 1, 2020, for automatically updating the minimum salary test level and the highly compensated employee compensation level.

The new rule has been announced by the USDOL, and the Office of Management and Budget has approved it. However, it has not yet been published in the Federal Register; so, it is not yet available to the public in printed official form.

In order to assist the public, the USDOL Blog states that there are several options for employers to consider in light of the new rule.

1. Raise salary to at least the new threshold to keep an employee exempt from being entitled to overtime compensation. This assumes the employee also meets the applicable “duties tests” for the exemption that have not been changed by the new rule.
2. Instead of raising salary, reclassify a currently exempt employee as non-exempt, and pay time-and-a-half his/her weekly regular rate of pay for overtime work. Weekly regular rate of pay is determined based on existing USDOL rules.
3. Leave the employee at his/her current salary, and pay the employee time-and-a-half the employee’s weekly regular rate of pay whenever the employee works in excess of 40 hours in any work week.
4. Limit workers to 40 hours of work per week.
5. Evaluate and realign hours and staff workload, including when necessary, hiring additional workers, in an attempt to make overtime work unnecessary.

Some employers may find the above-listed USDOL suggestions to be unrealistic and counterproductive. Nonetheless, the new rule will become effective on December 1, 2016, only six months from now. Employers will be wise to carefully consider their legal options and obtain competent legal advice in order to make sure they will be in full compliance with federal law. This may also be an opportunity for employers to make sure their employees currently classified as exempt from receiving overtime compensation continue to meet the “duties tests” for their overtime exemption. These “duties tests” have not been changed under the new rule.