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Significant Change to Overtime Rules and Eligibility

Significant Change to Overtime Rules and Eligibility

Posted on May 31st, 2016

As expected, the White House has announced a crucial change in the laws that determine who is eligible for overtime pay.  Effective December 1, 2016, The Department of Labor will enforce modifications to the Fair Labor Standards Act that will raise the threshold for Administrative, Executive and Professional exemptions from overtime pay.

Federal overtime rules require that employers pay eligible non-exempt employees at least 1.5 times their regular rate of pay when they work more than 40 hours a week. The new requirement increases the threshold for white collar exemptions and could expand the number of employees eligible for overtime from about 8 percent of the salaried workforce to 40 percent.

  • The minimum weekly salary level for exemption from overtime pay will be $913.00 per week or $47,476.00 per year. Eligibility will be based on the nature of work performed, education and type of business they are employed by.
  • Business will need to review their employee populations to determine who may be affected by this change and how to accurately account for their time worked and pay them accordingly. Options include:
    • Raise affected employees’ salary above the $47,476.00 threshold
    • Pay overtime to affected employees starting 12/1/2016
    • Track and limit the hours of affected employees to prevent them from exceeding 40 hours in a given week