The New Overtime Rule, effective December 1st, 2016, is expected to impact 4.2 million workers in the United States. In a nutshell, the legislation raises the minimum salary amount for exempt employees or more commonly referred to as salaried workers, from the current $455 a week requirement to $913 a week. As of December 1st, exempt employees must be compensated at the new minimum salary amount. For highly compensated employees, the salary increases from the current $100,000 requirement to $134,004 a year. Based on salary alone, 35 percent of full-time salaried workers will be automatically entitled to overtime.
The Department of Labor determined the new salary threshold, by looking at the 40th percentile of weekly earnings for salaried workers in the lowest-wage Census region. Currently, this was in the South region. The Department of Labor will use this same method to determine the new salary threshold every three years. The new salary amounts are expected to be posted 150 days before their effective date, giving employers time to make any adjustments as needed. August 1, 2019, will likely be the release date for the new salary threshold, so mark your calendar.
Another a big change that will go into effect on December 1st is the inclusion of non-discretionary bonuses. The final rule allows employers to pay up to 10 percent of an employee’s salary as a non-discretionary bonus that must be paid on at least a quarterly basis.
Some things that did not change due to the New Overtime Rule include the duties test that is used to determine exempt status. Overtime is still paid as time and one-half the regular rate for hours worked over 40 in a workweek. Employers will still need to retain accurate timekeeping records for non-exempt employees.
Businesses both large and small will feel the impact of the New Overtime Rule. Make sure to take a look at your current practices and adjust as you see necessary. Over the next few weeks, simplyHR will be posting additional information to dive a little deeper into some of the topics discussed in this overview. simplyHR will also be presenting on the New Overtime Rule at the Larimer Small Business Development Center in Fort Collins, CO on November 11, 2016. This presentation is free of charge, and seating is limited. To register, follow this link: https://clients.coloradosbdc.org/workshop.aspx?ekey=80360201
If you have questions/comments/concerns, simplyHR would love to hear from you!
simplyHR is an HR consulting firm located in Fort Collins, CO, servicing companies in all 50 states. Our goal at simplyHR is to provide training, education, partnership, and resources to make Human Resources simple for small businesses.
The content of this website provides practical and HR best practice information and is not legal advice. simplyHR LLC does not provide legal advice or other professional services. While every effort is made to provide accurate and current information, laws change regularly and may vary depending on the state and/or the municipality your business operates in. The information provided from simplyHR is provided for informational purposes and is not a substitute for legal advice or your professional judgement. You should review applicable federal, state and municipality laws in your jurisdiction and consult with legal counsel as you deem necessary.