New Overtime Rules

Originally published by Rob Radcliff.

Thee new “Whit Collar Rule” for exempt/non-exempt from the Department of Labor kicks in on December 1, 2016.  In short, employers will no longer be able to treat “white collar” employees that make more than $47,476 per year as exempt and will pay overtime once they work over 4o hours a week.  The DOL suggests three options to employees:

• Raise salary and keep the employee exempt from overtime: Employers may choose to raise the salaries of employees to at or above the salary level to maintain their exempt status, if those employees meet the duties test (that is, the duties are truly those of an executive, administrative or professional employee). This option works for employees who have salaries close to the new salary level and regularly work overtime.
• Pay overtime in addition to the employee’s current salary when necessary: Employers also can continue to pay their newly overtime-eligible employees the same salary, and pay them overtime whenever they work more than 40 hours in a week. This approach works for employees who work 40 hours or fewer in a typical workweek, but have occasional spikes that require overtime for which employers can plan and budget the extra pay during those periods. Remember that there is no requirement to convert employees from salaried to hourly in order to calculate their overtime pay!
• Evaluate and realign hours and staff workload: Employers can ensure that workload distribution, time and staffing levels are all managed appropriately for their white-collar workers who earn below the salary threshold. For example, employers may hire additional workers.

Here is a link to general guidance from the DOL.  Employers have options but need to be vigilant in complying with the law to avoid FLSA collective actions a.k.a. class action lawsuits over overtime.

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