impactAlert: US Department of Labor Releases Final Overtime Rule, Goes into Effect Dec. 1, 2016- 05/25/2016

The U.S. Department of Labor (DOL) has unveiled its final rule changing eligibility for overtime pay.
This policy, which takes effect on December 1, 2016, doubles the salary threshold — from $23,660 to $47,476 per year — under which most salaried workers are eligible for overtime (hourly workers are generally guaranteed overtime pay regardless of their earnings level with the exception of computer professionals paid hourly). 

Here are some quick facts to help you begin the process of complying with this new rule:

  • The salary threshold, as noted above, goes from $23,660 to $47,476 a year (or from $455 to $913 per week)
  • To reach the new minimum salary threshold, employers can use up to 10% of non-discretionary bonuses and commissions to reach that amount
  • The DOL’s final rule is not changing any of the existing job duty requirements to qualify for exemption
  • This new salary threshold will be automatically updated every three years to keep pace with inflationary growth
  • Also as noted above, employers must be in compliance by 12/1/16, which means this rule’s requirements begin in the pay period that encompasses 12/1

The DOL advises employers to consider these following options to comply with this new rule: pay time-and-a-half for overtime work; raise workers’ salaries above the new threshold ($47,476); limit workers’ hours to 40 hours per week; or consider some combination of these actions.

To this end, bear in mind one key point: employers should consider all consequences of their decision because there will be a financial impact; employee morale issues; and/or there may be an organizational cultural shift.

In addition, employers should consider establishing clear communications about this rule’s requirements with their employees, especially to those employees:

  • who may improperly see a reclassification as a demotion and;
  • who aren’t accustomed typically to keeping track of their hours worked

If you have any questions about the DOL’s new final overtime rule or about how to comply, please contact an impactHR team member via email at info@impacthrllc.com or phone 410-312-7882.

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