The Federal Department of Labor (DOL) is taking steps earlier than anticipated to implement new proposed overtime rules. These proposed rules significantly increase the minimum salary that must be paid to an employee to be exempt from overtime. The new rule will increase the minimum salary from the current level of $23,660 to $50,440 annually.
President Obama announced proposed changes to federal regulations that will affect whether millions of salaried workers are eligible for overtime pay this past summer. Based on the DOL's actions, is is expected that the NEW overtime rules may go into effect as early as July 2016. The earlier implementation date effectively prohibits Congress from utilizing the Congressional Review Act to try to rescind or alter the rule once it is final.
Be Prepared to Make Changes for Exempt Positions
The ORA, National Restaurant Association (NRA) and the Partnership to Protect Workplace Opportunity (PPWO), on this issue. The exact date that DOL's proposed rules will become effective, or even the final wording for the rules is not known. In the interim, we are advising our members to be prepared to make changes to your overtime policies for overtime-exempt employees who will be affected by the anticipated increase in the base salary requirement.
- For example, if any of your overtime-exempt employees' current annual salary is just below the new minimum threshold, you may want to consider increasing that employee's base pay to at least the new minimum threshold. Keep in mind however, that this employee's duties must also continue to meet the other threshold requirements for an exempt employee.
- If it makes more financial and organizational sense, you can consider converting employees who are currently overtime-exempt to an hourly wage, and pay those employees time and one-half for all hours worked in excess of 40 hours in any work week.
- Another option is to hire additional employees and reduce hours for all employees to minimize the impact of any potential overtime compensation requirements.