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We’re Headed to Overtime!

Posted in News and Recent Decisions, Operating a Business

Time is runningTime Clock out to plan for some big changes in overtime pay law. Last summer we wrote about a proposed “modernization” in the Department of Labor’s overtime pay rules. The rule has now gone through the required commentary period, and will now be effective December 1, 2016.

Currently, overtime law allows employers to be exempt from paying their salaried employees time and one-half for overtime worked if those employees are in “white-collar” positions and if the employee makes over a certain salary threshold. White-collar positions are defined as executive, administrative, or professional positions (and are defined more specifically by the Department of Labor). Right now, the salary threshold for the exemption is $23,660 per year or more. Starting December 1, 2016, however, the new salary threshold for the exemption will be $47,476 and above.

You may have heard the news that some states are suing to prevent the new rule from going into effect, and that the US House of Representatives just passed a bill to delay the effective date of the law for six months. But, if you were hoping that this would allow for a bit more time to plan for this new rule you are probably out of luck. Unless there is a stay on the new rule by the Supreme Court or if the president decides not to veto the Congress’ bill, both of which are unlikely, the new rule will take effect in just two months.

With that in mind, here are a few possible solutions to help ease the updated rule’s impact on your business:

  • Establish a policy (if you don’t already have one in place) requiring employees to track their time worked during the week and requiring approval before being allowed to work over forty hours in a week.
  • If you have employees who make more than the new salary threshold but don’t meet the “white-collar” position definitions, you could try transitioning the employee into a new role that makes them eligible for the exemption.
  • Lastly, if you have employees that are currently close to this new salary threshold and you know they often work more than 40 hours a week, depending on the situation, it may actually be more economical to give them a raise (or a bonus) to put them above the $47,476 threshold to be eligible for the exemption, and avoid paying 150% their salary for extra time worked.

This new rule change will have a large impact on many employers and employees across the country. With the effective date of December 1st quickly approaching, the business attorneys at Schober Schober & Mitchell S.C. will be happy to help you plan how to best comply with the new law.