New Overtime Rule – What you need to know
by Meagan Bulloch
On May 18, 2016, the US Department of Labor (DOL) published the Final Rule on overtime, which amended the Fair Labor Standards Act (FLSA). This change is expected to affect approximately 4 million workers across the United States.
Beginning December 1, 2016, the salary threshold for non-exempt workers increases from $455/weekly ($23,660 annually) to $913/weekly ($47,476 annually). Under this new rule, any worker regardless of their role or title who earns less than that amount will have to track their hours and will be entitled to overtime pay which equates to time and a half for any hours over 40 in a week.
How does this compare to the old rule? Check out this comparison table.
What are my Options?
- Raise salaries for non-exempt “white collar” employees above the $47,476 threshold so that they will be exempt from overtime
- Limit the hours worked by these employees to 40 or fewer per week
- Hire additional workers to perform the extra hours
- Pay non-exempt employees overtime for any hours worked beyond 40 per week
What else should I consider?
- Determine whether your organization is entitled to minimum wage and overtime pay protections on an enterprise or individual basis.
- Review personnel records, job descriptions and worker classifications to make sure their actual job duties (not titles) are used to determine exempt or non-exempt status.
- Review employee workload to evaluate current staff capacity considering weekend or seasonal workload fluctuations.
- Review terms of any grant agreements or contracts and identify staffing needs. Keeping in mind that the organization may be contractually obligated to maintain services at a predetermined level.
- Consider “what if” scenarios and estimate budget and cash flow impacts.
- Revisit organizational policies and procedures including timekeeping, compensation and overtime to make sure they are in line with the new rule requirements.
Is anyone excluded?
The DOL has a non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. From December 1, 2016 through March 17, 2019, the DOL will not enforce the updated salary threshold of $913 per week for the subset of employers covered by this non-enforcement policy.
Be sure to give Langdon & Company LLP a call if you have questions on how this affects your organization.
Meagan ([email protected]) is an Audit Partner at Langdon & Company LLP. She works on various clients from associations to healthcare.