The Department of Labor has just announced a Final Rule on overtime pay, which is projected to affect over 4 million employees who will be eligible for overtime pay. This Final Rule defines which white collar workers are protected by the Fair Labor Standards Act’s minimum wage and overtime laws. Employers must comply with these new regulations when they go into effect December 1, 2016.
Here are some key provisions of the Final Rule:
- All workers earning less than $913 per week, or $47,476 annually for a full-year worker, must be paid the overtime rate for any time worked beyond 40 hours per week.
- Overtime pay rate is time and one-half the regular hourly rate.
- The threshold for highly compensated employees has gone up, from $100,000 to $134,004.
- Automatic updates to these thresholds will be made every three years, beginning January 1, 2020.
Companies should act now to plan for the increase in wages. If an employer plans to implement one of the first two options below, appropriate methods to track employee’s time before the regulations go into effect should be considered.
Employers generally have three choices for affected employees:
- Limit hours to 40 per week.
- Pay time and one-half their regular hourly rate for all hours worked over that limit.
- Increase exempt employees’ salaries above the $47,476 threshold.
For more information, see the Department of Labor’s Overview and Summary of Final Rule.
Article by Goldin Peiser & Peiser, LLP