|On May 18, 2016, the Labor Department finalized a much-anticipated ruling, updating the overtime pay regulations for salaried executive, administrative, and professional employees under the Fair Labor Standards Act (FLSA). The new ruling doubles the salary levels needed for white-collar workers to be exempt from the overtime pay requirements, which will have a nationwide impact on employers and their businesses. With an effective date of December 1, 2016, employers only have six months to prepare.
Based on this ruling, the overtime pay threshold of $23,660 ($455 per week) for executive, administrative, and professional workers will increase to $47,476 ($913 per week). According to the DOL, the final ruling includes mechanisms to automatically adjust the exemption level every three years in order to maintain it at the fortieth percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region. Thus, non-exempt employees who make under $47,476 will be entitled to overtime compensation 1½ times their regular rate of pay if they work over 40 hours a week.
By expanding the salary threshold, the number of employees entitled to receive protection for overtime work will increase by an estimated 4.2 million Americans. Accordingly, employers must take steps to ensure that they comply, including:
- Determining how many currently exempt employees will be entitled to overtime pay;
- Calculating the number of overtime hours worked by those newly non-exempt; and
- Reorganizing job duties and classifications, schedules and hours, salaries and wages, etc.
If you have questions regarding the new overtime ruling or how your employees are classified, please reach out to The Axelrod Firm. We can help your organization make informed, advantageous decisions. The best time to deal with employment-related concerns is before they become a problem.