Final Overtime DOL Rule – What now?
As an employer you are governed by labor laws – and the U.S. Department of Labor (DOL) recently issued its Final Rule pertaining to payment of overtime under the Fair Labor Standards Act (FLSA), which will go into effect December 1, 2016.
GREAT! WoooWhooo… Okay… so – what does this mean to you?
After receiving more than 270,000 public comments regarding the changes the DOL’s Final Rule is viewed as a “compromise” the changes are significant and heavily favor the employees.
There are four points to cover:
ONE: The minimum weekly salary for exempt employees is $913.00 per week or $47,476 annually for a full-time worker.
TWO: Nondiscretionary bonuses and incentive payments, including commissions, may satisfy up to 10% of the new standard salary level if paid on a quarterly or more frequent basis, and employers may make “catch-up” payments at the end of the quarter.
THREE: The minimum annual salary required for Highly Compensated Employee exemption will increase to $134,004 for a full-time worker.
FOUR: The minimum compensation requirements will automatically increase every three (3) years going forward. The first one will occur January 1, 2020 and the DOL will publish updated rates at least 150 days before their effective date.
Here is the Final Rule in a bite size pack: A full time salaried employee must earn a minimum of $913.00 per week or $47,476 annually.
What does this means to you, the employer?
Starting December 1, 2016 no employee will be exempt from the overtime requirements of the FLSA if they are paid a salary less than the new minimum salary of $913 per week or $47,476 per year, which is more than double the current minimum. For any and all salaried employees presently earning less than the new minimum, employers must decide the following:
1. increase the employee’s salary to meet or exceed the new minimum
2. reclassify the employee as non-exempt and pay overtime for all hours worked over 40 in a week, in addition to complying with record keeping requirements
What employers can, and should do now?
Either option can have a significant budgetary impact, especially for employers with large numbers of employees who are currently exempt but do not meet the new minimum salary of $913.00 per week threshold. Employers should utilize the notice period to analyze options and make educated decisions. Some employers may even need to hire additional employees to control overtime impacts.
What can Moresource do for you?
We can help you analyze your current staff’s status and pay rates to determine which employees fall under the new Exempt/Salaried minimum rate, We can educate you and your staff about the new Final Rule and answer questions about how the change will impact them. We can show you why an easy-to- use, yet highly structured timekeeping system is necessary for compliance and why it is best to implement the changes sooner rather than later.
For more information call our offices today 443-1234.