Upcoming Changes to Overtime

Any day now, the DOL is expected to release its final changes to overtime regulations, which will create a ripple effect of costly wage increases.




*This information was in regard to the DOL overtime rule that was vetoed.

Any day now, the Department of Labor (DOL) is expected to release final changes to the regulations that govern overtime under the Fair Labor Standards Act (FLSA). Upon their release, businesses will only have 60 days to comply with the new rules. If you currently have employees who earn more than $23,660/year but less than $50,440 and are paid a salaried amount, be prepared for big changes.

On June 30, 2015, the DOL’s Wage and Hour Division announced a Notice of Proposed Rulemaking to update the regulations defining which white collar workers are eligible to receive pay for working more than 40 hours in a workweek. Beyond having to qualify for an overtime exemption, employees currently have to make a minimum salary amount of $23,660/year or $455/week to be exempt from overtime wages. The proposed changes will more than double the minimum weekly salary threshold for overtime eligibility from $455 per week to an estimated $970 a week.

Since the initial proposal nearly a year ago, the DOL has welcomed public input and is now expected to formally announce the final changes to the policy shortly. Once the final changes are announced, employees making less than $50,440/year or $970/week will have 60 days to get a system set up for them to track time and attendance, and employers will then have to pay any due overtime to qualifying employees working more than 40 hours/week.

The proposal also includes an increase in the salary level for highly compensated employees from $100,000 to $122,148 annually. In upcoming years, the proposed rules would establish an automatic update every year of both the salary and compensation levels.

The impact of these changes could be both costly and widespread, and it is important for your business to have a plan. As soon as these regulations are issued in their final form, we will analyze them and be ready to advise our Stratus.hr clients who are impacted by these changes. With our solutions, we can help prepare for and execute this transition in a manner that is seamless, compliant, and cost- effective.

If you have questions about the proposed changes, please contact your Stratus.hr Human Resources Consultant or email hr@stratus.hr.

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