“Overtime Pay For Christmas”
Since 1975, the share of employees who qualify for overtime pay has plummeted from 62% to 7% according to the Department of Labor. The solution? Under new rules announced by the Obama administration, 4.2 million American workers will become eligible for overtime pay effective December 1, 2016.
Your new regulation double the current salary threshold for salaried employees who are guaranteed overtime pay from $23,660 ($455 per week) to $47,476 ($913 per week). Moreover, that threshold will increase over the next succeeding three years to ensure that it keeps up with inflation.
As a Business People employer, you can react in one of two ways: pay for employees above the new floor of $44,476, rendering them ineligible for overtime pay, or convert salaried workers into hourly workers. To limit overtime exposure, the converted hourly employee must work no more than 40 hours per week.
A third option is to classify all salaried employee as an “executive, administrator or professionals. The Fair Labor Standards Act allows an employer to deny this category overtime pay. However, to do this without examining their true job duties invites DOL investigations and potential lawsuits as Starbucks, Dollar General, CVS and Walmart discovered.
Finally, since hourly employees do not always qualify for the same benefits as salaried employees – 401(k), vacation time, health care- Northeast Indiana employers will need to reexamine how they classify workers. Most will choose the route that is the least costly.
With the salary compensation for overtime doubled, many workers will expect to get a nice raise this December. You need to act now.
Article by Loren K. Allison, attorney at law
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