Though overtime rule changes were first released back in May (see our blog, “Just in: DOL Changes FLSA Overtime Rules” which covers all of the original details), there were several attempts to delay the effective date. Despite this delay, the new rules are officially on track and will take effect in less than a month! Be sure you’re aware of the looming changes.

New rules

Under the DOL’s new guidance, those who meet the administrative, professional and executive exemptions under the duties test (which has not changed) and earn at least $913 per week, or $47,476 annually will now be eligible for the overtime exemption. Previously, the exemption applied to those earning $455 per week, and $23,600 annually.

This means that, as of December 1st 2016, if an employee earns less than $47,476 per year, he/she must be classified as non-exempt and be paid time and a half for weekly hours over 40.

What can my business do to ensure we are compliant with the new rules?

• Review your current employee classifications. Do the new rules change who is exempt and non-exempt in your establishment?
• If they meet the duties test, determine whether you should raise certain employees’ salaries to meet the new exemption requirement—Would that be more economical than paying them overtime? If an employee works overtime on a regular basis, and his/her salary is closer to the new minimum ($47,476) you might want to raise his/her salary so you can retain the exemption.

If the opposite applies (salary closer to previous minimum and doesn’t work overtime often), it might make sense to classify the employee as “non-exempt” and pay them hourly.

Questions? Contact us.