Updated 11/23/2016: On November 22, 2016, a federal judge in Texas put a hold on the new FLSA overtime regulations that were set to go into effect on December 1st that would have raised the salary threshold for exempt employees from $23,660 to $47,476. It is likely that the DOL will challenge this ruling so employers should still have a plan to make changes to exempt employees if necessary.
New Overtime Rules Go Into Effect December 1st – Are You Ready?
On May 18, 2016 the new overtime rule was announced. This new ruling goes into effect December 1, 2016 and will extend overtime pay protections to 4 million+ workers. Is your company ready? To help, we have compiled some frequently asked questions and answers regarding the new overtime law to help you and your company prepare for the road ahead.
How many hours need to be worked for an employee to receive overtime?
In general, nonexempt hourly and salaried employees working 40 hours+ a week, and are covered under the FLSA, are eligible to receive overtime under the new law.
Do all salaried employees fall under this new overtime ruling?
No. The United States Department of Labor final ruling notes that the following minimum salary levels must be met in order for a salaried employee to be
considered exempt in addition to the salary basis and job duties exemptions:
- EAP Exemption: $913/week ($47,476/annually)
- HCE Exemption: $134,004/annually
Will there be any changes or updates to this ruling?
Yes. Automatic updates to the identified salary level requirements will occur every three years, beginning Jan. 1, 2020.
As an employer, what should I do?
Work with your HR department to understand the number of hours worked by your employees and who will qualify for overtime under this new rule. It is also important to review which employees are exempt versus non-exempt to make sure they are classified correctly. When meeting with your HR department, review the following questions:
- Do particular employees or departments work more overtime than others?
- Are there certain times of the year when extra hours are needed vs. slower times of the year?
- What training is needed to help prepare the management staff for scheduling and overtime requests?
Once you have identified the peak overtime periods during the year, start to create a budget. Having a budget and overtime plan in place will help ease the cost and help maintain your business’ financials.
There are planning strategies that may be considered, which HW&Co. will be happy to discuss based on the particulars of your company’s specifics.
To learn more about the new overtime law, the impact it will have on your company and how you can plan for 2017, contact Kirsten Thompson, CPA, CGMA at HW&Co. today.