The Department of Labor (DOL) has updated overtime rules and increased the salary threshold for exempt employees from $455 per week to $913 per week, effective December 1, 2016. Salaried workers making less than $47,476 annually will now be entitled to paid overtime if they work over 40 hours in a week, regardless of their job duties.
This is a massive change that’s about to impact employers and employees everywhere.
What Do the New Overtime Rules Mean?
The DOL is hoping the new rules will eliminate classification confusion and possibly even boost pay for many workers.
However, business owners are feeling differently.
The new overtime rules have employers saying, “Pay won’t be better,” and “Career prospects may be hurt.” This adds more complexity to tracking overtime and ensuring they stay in compliance with compensation laws.
Another major loss that comes with these new rules is flexibility. Hourly workers don’t have the freedom to leave early one day because they stayed late to finish a project another day. They’ll have to spend time tracking hours and breaks and will possibly even miss out on opportunities if it would include overtime hours. Opportunities like traveling for a conference where it would be difficult to track hours worked and would most likely accumulate overtime hours.
Employers have a few choices to make, and you must make them soon.
- You could raise your employees’ salaries to reach over the threshold of $47,476 to keep them exempt from overtime pay.
- You could keep your employees at their current salary, change their status to non-exempt, and pay them for overtime hours.
- Or simply switch them to hourly pay and either pay them time-and-a-half for overtime hours or make sure they are not working overtime hours.
New Overtime Rules 101 – What You Need to Know:
- The salary threshold for FLSA exemptions now lies at $47,476 annually.
- The federal rule did not change the duties test.
- The effective date is December 1st, 2016.
- The salary threshold will be re-evaluated and adjusted every 3 years.