More Employees to Get Overtime Pay

More Employees to Get Overtime Pay

On May 18, 2016, nearly two years after President Obama directed the Secretary of Labor to update the overtime regulations, the final rule from the Department of Labor was announced. The final rule, which goes into effect December 1, 2016, gives employers six months to prepare and comply. The final rules raises the current salary threshold for exempt employees from $23,660 per year or $455 per week to $47,476 per year or $913 per week. It also raises the salary threshold for highly compensated employees from $100,000 to $134,004, and it provides for automatic adjustments every three years, starting on January 1, 2020, for updating salary and compensation levels.

While it is estimated that the final rule will affect over 4 million workers, it will undoubtedly change how many employers currently operate their business.  So what can you, as an employer, to make sure you are in compliance? You can pay time and one half for overtime work for any employee paid under $47,476 per year or $913 per week. You can raise the employee’s salary above the new threshold.  You can limit the number of hours an employee works to no more than forty hours per week, or you may do some combination of the above.

Lawsuits brought under the Fair Labor Standards Act for violations of the overtime provisions are all too common. With the new rule set to take effect in the very near future, it makes sense to start reviewing all employees’ salaries and their current job duties, especially those that may be affected by the rule. You will need to make a business decision as to what makes the most sense for how your business operates and its bottom line. Violations of the law are very costly and include repayment of the unpaid overtime wages, liquidated damages in the same amount of the unpaid overtime wages, and attorneys’ fees. Given the ramifications and the frequency of overtime claims, getting started early on the analysis and effectuating any necessary changes makes good business sense and may just avoid potential liability.