Alert

Overtime Pay Eligibility Changes Imminent; Employers Should Evaluate Applicability

Overtime pay change image

May 6, 2016

Observers expect the US Department of Labor (DOL) to finalize changes to the Fair Labor Standards Act (FLSA) in mid-May that will affect which employees are eligible for overtime pay. The new rule is expected to change the exempt salary threshold dramatically – increasing it from its current level of $23,660 to about $50,000. Now is the time to examine how this change will affect your organization.

Implementation

When the new rule goes into effect, we expect that employers will be given 30 to 90 days to make necessary payroll changes. For employers, this may include adjusting compensation structures, reclassifying employees, and/or changing salaries. In the near term, employers may need to implement more robust timekeeping systems. In the longer term, employers will benefit from continually educating employees on what constitutes overtime work and when it may or may not be necessary.

No “easy fixes”

One important thing to note is that simply raising salaries above the new threshold will not guarantee exemption from overtime pay. Even for employees with salaries greater than the new threshold amount, the job duties test must be considered to understand whether employee job duties meet the requirements for exempt status.

Stay tuned

We will send out another alert once the final rule has been issued.

For more information about FLSA or other employee-compensation related questions, please contact senior organizational development consultant Carrie Wiegand Cox using the information below.

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Carrie Cox, PHR, SHRM-CP
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Carrie Cox, PHR, SHRM-CP

Senior Organizational Development Consultant
Organizational Development & Family Business Services

Carrie has experience in a variety of human resource functions, including labor laws, compensation structures, employee classification, benefits administration, performance management, and human resource best practices. She has served clients in a number of industries including manufacturing, construction, banking, and not-for-profits. Carrie is a member of the national and local chapters of the Society of Human Resource Professionals (SHRM) and serves on the Wichita chapter board of directors. She is a certified practitioner for the Myers-Briggs Type Indicator® and the Hay Group’s Emotional and Social Competency Inventory. Her additional certifications include Professional in Human Resources (PHR) from the Human Resource Certification Institute and SHRM-CP designated by the Society for Human Resource Management.

Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.