New Overtime law | Employers be prepared if you have any salaried employees!
- Jun 17, 2016
- 2 min read
CHANGES IN OVERTIME FOR SALARIED EMPLOYEES
Beginning December 1, 2016 new rules effecting over 5 million presently ”exempt” workers will officially go into effect. For clients here in the South Census Region, that will mean that salaried workers making less than $913 per week ($47,476 annually) will become eligible for Overtime Pay at the rate of time and a half for all hours worked over 40 in a work week. This is a substantial increase over the current $455 per week that is now in effect. Additionally, the new regulation requires future automatic updates to these threshold rates every three years beginning in 2020. DOL expects that these changes will cost employers $1.18 to $1.27 billion per year.
Here are 5 tips to help!
1. Check State versus Federal Regulations
Each state may enact regulations that differ from federal regulations. Businesses will be subject to whichever set of directives is more generous to employees.
2. Classify Employees by Salary
Employees making over the threshold amount may be exempt from overtime if their job duties primarily involve executive, administrative or professional duties, as defined under the regulations. Make a list of the employees whose salaries do not exceed the threshold because they may be entitled to receive overtime once the changes are enacted.
3. Calculate Employee Hours
Identify exactly how many hours per week each employee works. If a previously exempt employee made $26,000 annually under the old rules, and actually worked 40 hours per week, then you can convert that salary into an hourly rate equal to their pay, or $12.50 per hour. Monitoring those employees’ work hours proactively with threshold reports and/or scheduling tools may help manage overtime costs or ensure that any work exceeding 40 hours per week is paid at the appropriate overtime rate. Click Here for a free timekeeping quote from Apex Payroll Services.
4. Consider Changes to Salaries
Consider a different strategy for employees who make less than the proposed salary threshold, who were previously exempt from overtime and who typically work more than 40 hours per week. You could raise these employees’ base salaries to at least the exemption threshold. To determine if this is a more cost-effective approach, calculate the increased salary and compare it to the estimated overtime costs that would otherwise apply.
5. Monitor Overtime
Examine the ebbs and flows of your business and think about seasonal fluctuations. You may find it’s more cost-effective to hire additional full-time, part-time or even temporary employees. Or you may want to consider implementing an automated scheduling solution to help manage labor costs.
Of course there are other considerations and possibilities but the important thing is to plan ahead now and don’t wait until the last minute---December 1st will be here before you know it. We at Apex Payroll Services will be happy to assist you. Call us today! 334-792-7276
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