After months of anticipation, the DOL has finally made a formal announcement about the new overtime salary threshold: $47,476. Not a nice round number like the proposed $54,440, but still divisible by two and still more than double its predecessor of $23,660.
The new regulation also states an increase will occur every three years to match (and stick with me on this lengthy- technical sentence) the 40th percentile income of the country’s lowest-income region (currently the Southeast). The last increase was in 2004, and the increase prior to that was before Millennials were even a generation.
With this added to the new rule, a dramatic increase in salaries can be avoided in the future – thus preventing scrambling and panicking by employers to comply.
It’s estimated 4.2 million workers will need to be reclassified as non-exempt by the December 1st deadline. Below are some suggestions on how your company can prepare:
- Identify which salary employees fall under the $47,476 threshold.
- Start tracking hours for salaried employees.
- Run numbers and possible scenarios.
- Should you raise the salary for employees to meet the new threshold, or would it be better to keep them at their current salary and earn overtime?
- Is it better to move them to hourly pay based on your hour tracking?
- Re-examine job descriptions and tasks.
- Are your current employees correctly identified?
- Are they working more often in tasks that do not qualify them as exempt?
- Here is a brief excerpt from the FLSA website describing executive job duties. Click here for more details about exemption rules: The Job duties are exempt executive job duties if the employee
- regularly supervises two or more other employees, and also
- has management as the primary duty of the positions, and also
- has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments
- Consider the impact changes will make.
- What will keep you in compliance but also have the least negative impact on your company budget and employee morale?
- Develop a plan of execution for changes in policies, training, and job titles.
- Keep up communication with your employees on these changes.
- Take this as an opportunity to discuss wage and hour concerns that may have already been an issue for some employees.
- Seek legal advice and help.
- This a federal change, but every state and county has their own regulations. Make sure you are in compliance with all the regulations to avoid any fines.
Even though this is a dramatic increase, at least we finally have an official number and can begin to properly prepare.