What the New Overtime Ruling Could Mean for Businesses

The U.S. Department of Labor recently issued its final rule to change federal overtime pay requirements.  The new ruling, going into effect December 1, 2016, will make millions more workers eligible for overtime pay.

The new overtime rules will implement some of the following changes:

• The minimum exempt salary threshold will be more than doubled to $47,476 from the current $23,660 level.
• The minimum salary threshold will be automatically updated every three years and tied to the 40th percentile of full-time salaried workers in the lowest of the five wage regions of the country, which is currently the Southeast.
• Paired with the much higher salary threshold and automatic adjustments, employers will for the first time be allowed to count bonuses and commissions toward as much as 10 percent of the salary threshold.
• There will be no changes to the duties test to determine overtime eligibility.

Visit the U.S. Department of Labor’s Wage and Hour Division website for complete details of the ruling.

How will the overtime change affect businesses?

Companies should be prepared to adapt to these new changes as they may impact their bottom line. Some employers may decide to increase the salaries of some workers to push them over the cutoff or hire additional workers after limiting hours for existing employees.

Others may need to revisit policies regarding working overtime as well as reviewing employee benefits. Contact me to learn more about how these rules can impact your company.