A new US Department of Labor (“DOL”) Regulation that is set to go into effect on December 1, 2016 provides for overtime pay to individuals that are earning up to a salary of $47,500. This means even if, they are salaried employees if, they work more than 40 hours per week, then they would be entitled to time and half for each hour over 40 hours in a week. This new regulation requires Administrative, Executive and Professional employees to be paid $913 per week or $47,500 to be exempt from overtime pay.
The new regulations essentially, doubles the previous salary requirement for the exemption of approximately $24,500. The impact of the new regulation remains to be seen, but it is a significant change in the Fair Labor Standards Act’s (FLSA) overtime pay exemptions. Many salaried employees often, work more than forty (40) hours per week, but do not get overtime pay. However, under the new regulation many employers may be required to pay overtime to salaried employees working more than 40 hours per week if, they make less than $47,500.
Will this regulation change or be repealed by President Elect Donald Trump? It remains to be seen. However, if Trump wants to keep manufacturers in the United States, then perhaps the rule may be repealed. The additional costs to manufacturers from this new overtime regulation may be significant for many employers that pay a higher salary, but require more than 40 hours per week. This may also, have an impact on salaries of residents or other professions where individuals typically, work more than 4o hours per week.
The actual impact of the rule change remains to be seen, but it can be significant for employers that employ Administrative, Executive or Professionals that are paid less than $47,500 per year. The standard duties test to ensure that the employee qualifies for the Administrative, Executive or Professional exemption from the overtime pay requirement remains the same. However, business owners, entrepreneurs and startups may have to revise their compensation policy to avoid overtime pay violations.