Business owners will want to get familiar with the new overtime rules taking effect soon.
Q:I believe I have a couple of employees who will be affected by the new overtime rules, but I’m not sure. Can you explain the rules and what I have to do?
A: I’m not a legal expert, but I can give you a quick layman’s overview. The new overtime rules are changes to the Department of Labor’s Fair Labor Standards Act, which among other things, established the minimum wage, eligibility for overtime pay, and record-keeping requirements for full and parttime employees.
The new rules you’re talking about go into effect Dec. 1 and may affect which of your employees may be eligible for overtime pay and when.
The Fair Labor Standards Act came into play in 1938, establishing the minimum wage and requirements for time-anda-half overtime pay for employees working more than 40 hours in a week. It also established the whitecollar exemption and a corresponding salary threshold for employees performing certain duties and making over a certain amount.
Over the years, the salary threshold didn’t keep pace with inflation, meaning that many of these workers were not being paid a fair day’s wage for a hard day’s work, and that’s what this latest rule is all about.
The amount of money a worker has been able to make in a given week before being eligible for overtime hasn’t been changed since 2004, and before that, it hadn’t changed much since the 1970s.
The new rule brings the exemption salary level to $913 from $455 weekly, slightly more than double what it has been. Although this is more in keeping with inflation and realistic current salary ranges, some employers are concerned that their labor costs will become unmanageable if they will now have to pay overtime to more of their employees. The rule also calls for automatic updates to the threshold every three years.
To that end, some employers are thinking about how they might change how they are paying some of their employees to keep them exempt from overtime. If, for example, they have an employee who makes almost $913 a week, they might give that employee a raise so he or she will be over the threshold. Or an owner might change a salaried employee to an hourly employee and limit that employee’s hours.
Be aware that you can be penalized if you don’t follow the law. To get the full scoop from employment law attorneys, come to the UH Bauer College SBDC on Thursday and attend “Legal Preparations for the New Overtime Law.”
Register at sbdc.uh.edu for the $39 morning workshop.