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New Rules May Make More Employees Eligible for Overtime

The United States Department of Labor has tentatively approved long-debated changes in overtime rules that could become effective this year.  These changes will have a significant impact on employers around the country.

Though the final iteration of the new rules has not been made public, wage experts believe it will include the following changes:

– The current salary exemption is based on a minimum salary of $455/week ($23,660/year). When the new rules take effect, the minimum salary required to be exempt from overtime is going to increase to approximately $1,000/week ($52,000/year).

– There will be automatic annual increases in this minimum salary, likely tied to an inflation index.

– There may be more restrictive testing on employee duties that qualify employees as exempt.

The expected practical implications of this rule change for all employers are obviously significant:

– Fewer employees will qualify for exempt status. The DOL has estimated that some 5 million employees will need to be converted to non-exempt (hourly) status.

– To preserve exempt classifications, employers will need to increase salary to meet the new salary threshold.

– For employees converted to non-exempt status, employers will need to develop a new compensation plan, include rate or method of pay, taking into account the possibility of overtime pay.

– Possible redesign will be necessary of job descriptions, job schedules, staffing, and wage/hour policies.

– Communication to employees of the changes and the reason for the changes will be required.

– Training or re-training of formerly exempt employees should occur regarding time-reporting procedures, compliance with overtime rules, and adherence to rest and meal break requirements.

– Supervisors will need to be instructed on how to manage, counsel, coach, and discipline newly non-exempt employees to comply with timekeeping and record-keeping requirements.

For more information about the potential rule changes, click here.

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For more information contact:
Anthony C. Pietrangelo
PH: 901-685-2662
FX: 901-685-6122
apietrangelo@pcplc.com