The new FLSA Overtime Rule is about to go into effect. Maybe you aren’t so sure of what the final OT rule entails or how to prepare to ensure compliance. We’ve put together a handy guide and a few resources for you to check-out so you can get up-to-speed and move on with business.
The history and the future of the FLSA OT Rule:
- The last time the department updated the minimum salary for being an exempt (salaried) employee (over $23,660) was in 2004.
- The revision will take effect December 1, 2016.
- For an employee to be considered exempt, their annual salary will need to be over $47,476.
- Moving forward, the OT rule will be automatically updated every 3 years.
Who is affected by the new OT rule?
- Employees who are making $47,476 or less annually will now be eligible for overtime pay as of December 1, 2016.
- A total of 4.2 million people who are primarily salaried, white collar workers in administrative, professional, executive, outside sales, or certain computer-related occupations will be impacted.
How to prepare:
- Ensure that employees are truly designated as “exempt” using these three evaluations: salary-level test, salary-basis test, duties test.
- Know your options for handling the changes and create a plan for employees affected by the new OT rule.
Options for compliance in your office:
- Increase salaries.
- Pay OT wages.
- Eliminate or reduce overtime hours.
- Utilize non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level (must be a quarterly or a more frequent basis).
- Use a combination of the approaches listed above.
- Seek outside help from a consultant or use a staffing agency for projects, short or long-term needs to help alleviate workloads.
Still have questions? Take a look at this Q&A or try out this flow chart.
