The Department of Labor (DOL) has made significant changes to the Fair Labor Standards Act (FLSA), the federal law that controls overtime pay. Under the current law, employees are exempt from overtime pay if they are paid $455 per week ($23,660 per year). The most significant change under the new rule will raise the salary benchmark to $913 per week ($47,476 per year). The DOL intends to revisit the pay limit every three years starting in 2020 to stay on top of inflation and to adjust with future wage growth impacting the American workforce. The DOL’s primary goal of this drastic change to the FLSA is to clear up any misconceptions and ambiguity that American workers have about what they are and are not entitled to in regards to overtime pay. The DOL predicts that this new ordinance will allow millions of American workers to receive overtime pay within the first year of implementation that may have previously been denied overtime pay.
In order to prepare for the upcoming regulations employers have several options to ensure compliance with the new regulations. Employers can pay time and a half for overtime work done by employees falling within the new benchmark, increase employee salaries to the $913 per week benchmark proactively to make them exempt from the rule, and limit their employees to only 40 hours of work per week. Employers must determine the best way to comply with the new regulations while still meeting company needs. The new overtime rules are set to take effect December 1, 2016.
By: Nathan Cironi | Staff Auditor
