As the end of the year approaches many of you will be rushing to close out the year. Maybe getting your taxes in order, checking off Christmas lists, planning the company holiday party, planning for the new business year, or working to get that last customer closed before January 1st. You know the drill. You’ve done it before.
Well this year, courtesy of the U.S. Department of Labor, you have one more item to check off your list.
THE NEW OVERTIME RULE goes into effect December 1st, 2016.
What is the new rule?
Currently the overtime rule allows an employer to exempt overtime pay to salaried employees earning at least $455.00 per week. As of December 1st, 2016, the salary threshold increases over 200% to $913.00 per week ($47,476 a year). The Department of Labor estimates this rule change will allow overtime eligibility to 4.2 million employees.
What are my options?
1. Increase salaried employees’ wages to a minimum of $913.00/week.
2. Current salaried employees may continue to receive their salary. But, any hours worked in excess of 40/week must be paid at 1.5 of their calculated hourly rate (2080hrs/annual salary).
Example: Your company currently has department managers earning a weekly salary of $615.38 ($32,000/year). These managers work 45 hour per week. But, no overtime wage is paid for the 5 hours worked over 40. Under the new rule, the managers will either be paid an additional $115.38 for the overtime worked (5hrs x 1.5 hourly rate) or their weekly salary must be increased to $913.00 ($47,476.00/annual).
Do salaried employees need to clock-in and clock-out?
Not necessarily. Employers are currently encouraged to track work hours for salaried employees. However, increased diligence of time records and documentation will be essential.
There are exemptions for a few specific professional positions, government agencies, and non-profit organizations.
For more information visit www.dol.gov
Wayne S. Dean, II
Wayne Dean is the President of SourcePointeHR, a service provider of Payroll & Human Resource Administration to small and mid-sized companies. With over 15 years in the industry, Wayne has helped hundreds of businesses lower labor costs, increase productivity, and manage risk. You can find Wayne on LinkedIn or contact directly at email@example.com.