How the new federal overtime law will affect your business

In late May, the U.S. Department of Labor (DOL) updated overtime regulations for the first time in more than a decade to extend overtime pay to more than four million workers nationwide. These new regulations won’t be effective until Dec. 1, 2016, but it can’t hurt to plan.

Here are the key new overtime provisions:

working extra hours = extra pay

  • Previously, employees were excluded if they were salaried, earned at least $455 per week or $23,660 per year or were in positions considered executive, administrative or professional. Those exemptions have been lifted and the pay threshold for overtime has been nearly doubled to $913 per week or an annual salary of $47,476.
  • The new pay threshold will be updated once every three years, indexed to wage growth.
  • Highly paid employees who perform non-manual work are exempt. DOL recently bumped its threshold for such workers from $100,000 to $134,000.
  • There are many exemptions, notably:
    • Commissioned or outside sales employees
    • Computer professionals
    • Drivers, driver’s helpers, loaders and mechanics if employed by a motor carrier
    • Farmworkers employed on small farms
    • Salesmen and mechanics employed by automobile dealerships
    • Seasonal and recreational establishment employees

DOL defines these exemptions carefully, however, so check with a labor attorney or DOL’s Fair Labor Standards Act Advisor before declaring employees exempt.

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