Make sure your business is ready for the new overtime rule

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Make sure your business is ready for the new overtime rule

UPDATE: The new overtime rule was blocked by a federal judge on November 22, 2016. At this time, the overtime rule will not take effect as planned on December 1, but it could still be implemented later down the road. Employers may continue to follow the existing overtime regulations until a decision is reached.

"More than half of businesses don't even know the rule is out there."

As a refresher, the new overtime rule doubles the minimum salary level under which most salaried workers are guaranteed overtime.

The final rule address what’s known as the white-collar exemption. The minimum salary level under the white-collar exemption has been boosted to $913 per week, or $47,476 per year. Previously, the minimum salary level for the white-collar exemption was $23,660 per year.

This means the DOL has effectively doubled the minimum salary level necessary for the white-collar exemption: any salaried, exempt employees who earn less than $47,476 per year would be eligible for overtime.

The DOL has also linked a mechanism to both salary levels that automatically updates the levels every 3 years. The mechanism – a fixed percentile of wages (i.e. an amount equal to the 40th percentile of weekly earnings among full-time salaried employees in the country’s lowest income region) – has been criticized as flawed since fewer workers will be exempt and salaries for non-exempt employees will skew higher.

"There could be issues with Benefit packages and Timekeeping that the employer will need to address."

With changes such as these, it's helpful to have insight from the HR world on how employee-employer relations are affected. Here's what CheckWriters' Director of Human Resources, Carly Fallon, had to say about the changes to the overtime rule:

“In addition to the cultural change, and potential perception of former salaried, exempt folks taking a ‘step backwards’ in their career, there could also be issues with Benefit packages and Timekeeping that the employer will need to address.

"Things such as PTO accruals, timesheet requirements, and bonus structures are often differentiated amongst exempt and non-exempt staff. Employers will have to decide if they will honor their benefit break out, and thus upset staff morale with their status changes also including benefit adjustments, or whether they will make the financial decision to adjust these levels of benefits, potentially creating a huge budget-buster in this arena."

Additional Resources:

Here are some additional resources we've compiled from the Society for Human Resource Management (SHRM) and the Department of Labor (DOL):

FLSA Overtime Rule Resource - SHRM

Overtime Eligibility - FLSA Classification: What is meant by the terms "exempt", "non-exempt", "salaried" and "hourly"? - SHRM

Fair Labor Standards Act (FLSA) Advisor assists employers in understanding their rights and responsibilities under Federal employment laws - DOL

Fair Labor Standards Act (FLSA) exemptions for minimum wage and overtime pay requirements for "any employee employed in a bona fide executive, administrative, or professional capacity or in the capacity of outside salesman." - DOL

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