Change Ahead: Department of Labor Proposes Overtime Rules

07/28/15 | 8:00AM | Posted by TEAM Software




A proposed update to the overtime rules from the Department of Labor could mean big changes are ahead. The proposal outlines several updates to wage and hour regulations, including raising the salary threshold that determines which full-time salaried employees are eligible for overtime pay. The Department hasn’t updated this since 2004. The Department is also proposing that the salary threshold level be automatically updated to ensure that the test for exemption is effective and useful going forward.

The current threshold requires that employees who receive $455 per week or $23,660 per year or less be eligible to receive a minimum of time-and-a-half for working more than 40 hours in a week. The new proposal sets the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers. This more than doubles the threshold to $921 per week or $47,892, according to 2013 data, and is projected to be closer to $970 a week or $50,440 a year in 2016. This could mean a lot more employees will be overtime-protected, nearly five million more white collar workers according to the DOL.

While the changes won’t be finalized for months, there are a couple of things employers can be doing now. First, the Department is seeking comments on the proposed rule. Those who are interested can submit comments until September 4, 2015. In light of the proposal, it’s also important that companies be prepared ahead of time in order to control labor costs and ensure compliance with regulations. Preparations include evaluating which employees would be eligible to receive overtime under the proposed rules and ensuring that time is accurately tracked for each employee. In addition, with the automatically updated threshold, employers will need to make sure that they correctly evaluate exemption based on the 40th percentile going forward.

Additional Information and Resources:

The Department of Labor new proposal fact sheet

The Federal Register outlining the proposed rule in-depth (PDF)

Overtime Rules Send Bosses Scrambling,” an article originally published in the Wall Street Journal


Related TEAM Solutions:

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