The New Overtime Rule: Your Questions, Answers, and Concerns

New Overtime Rules and Regulations: Your Questions, Answers, and Concerns

New overtime rules have placed into law, which may affect your business and its employees.

Back in mid-May, the Department of Labor (DOL) finalized a rule that will have an enormous impact on agencies and their business clients. The DOL rule updates antiquated regulations that exempt certain employees from overtime and minimum wage requirements—these are commonly known as “white-collar” exemptions. This new law will require many employers to pay overtime to employees that were previously not entitled to this compensation.

The new law is set to take place on December 1, 2016, giving employers more than enough time to review these new guidelines, and adjust employee salaries and overtime eligibility status.

If you are planning on reading the regulations later, but just want a scope of what these new laws entail, here’s a slight oversimplification of the rules:

  • For any employee who is currently classified as exempt from overtime pay under “white-collar” exemptions who make less than $47,476 annually, employers must either re-classify them as non-exempt (requiring overtime pay) or raise their salary over the threshold.
  • Nondiscretionary bonuses and incentive payments, including commissions, can satisfy only one-tenth, or 10 percent, $47,476 bonus threshold.
  • Any employee who is properly classified under the “highly compensated employee” exemption must earn at least $134,004 in total compensation. This is a 34 percent increase from last year.
  • Then, in 2020, the $47,476 and $134,004 thresholds will be automatically updated every three years. The thresholds are expected to eventually reach $51,168 and $147,524, respectively.

Hoffman Brown Company is pleased to be of service by providing this important information. Please contact our team with any questions or concerns.