New DOL Overtime Rule Changes (continued from home page)

After months of speculation, on May 18, the US Department of Labor released its much-anticipated final rule that raises the white collar overtime exemption threshold under the Fair Labor Standards Act (FLSA). The new regulations take effect on December 1, 2016. The revised overtime pay regulations, which are estimated to affect at least 4.2 million American workers, will increase the salary threshold for the overtime exemption from $455 a week ($23,600 annually) to $913 a week ($47,476 annually). As a result of this regulation, businesses will need to start tracking hours for exempt salaried employees who are at or below the $47,476 threshold.

Those who may be affected by the new regulations are salaried exempt employees making $47,476 per year or less. Small business owners should have a plan in place for each of these employees, as they may become eligible for overtime pay. Depending on their current salary, their role, the classification of their role, and the number of hours they work, each employee will have a different outcome. You should start by creating a list of every exempt employee and their compensation to make the best decisions for your organization. It's critical that employers have accurate hourly data and a clear audit trail for the hours their employees have worked for a few reasons.

  • Accuracy: As a result of the new regulations, employers will have to pay their salaried employees who are below the new threshold for any overtime hours worked.
  • Audit trail: If an employee reports your organization for not following the new regulations, the Department of Labor will audit your business.
  • Decision support: As you consider how you will handle each employee's labor situation, you will need to have accurate employee time data. The amount of hours they currently work directly impacts how you choose to handle their compensation.

Employers should communicate the changes to employees now to prepare them for the potential impact. Small business owners need to be transparent about the current state of the regulations - it's public knowledge. Let employees who could be impacted know there is a chance they may be reclassified to nonexempt.