As of Dec. 1st U.S. Dept. of Labor (DOL) overtime rules put in place earlier this year will take effect – and without a doubt it will affect your business. How it impacts your operation depends on how you implement the regulations for your workforce.
The rule updates the part of the Fair Labor Standards Act that exempts from overtime pay salaried employees who earn above an established threshold of pay. Essentially the update doubles that threshold (for the first time since 2004 and for only the second time since the 1970s) to $47,476 a year. That means that salaried workers who do not earn more than $47,476 a year are entitled to overtime compensation.
How this impacts your company and your bottom line depends on how you compensate your employees and, of course, how many hours they work. There are some exceptions and other circumstances that can affect your compensation plans (for example, up to 10% of the threshold can be met by non-discretionary bonuses, incentive pay, or commissions, provided payments are made at least quarterly). So before the 2017 season gets into full swing it’s important to discuss this change with your HR manager, your accountant or even a consultant.
The DOL suggests options for employers including:
- Pay overtime at time-and-a-half
- Raise workers’ salaries over the threshold
- Limit workers hours to 40 hours per week
- A combination of the above
But whichever option or combination of options you choose, it’s important you make the changes necessary for the health and growth of your company and to make sure your business is in compliance with the law.
