The National Federation of Independent Business (NFIB) is raising the alarm for employers all across the United States of changes to overtime work rules. The modification to employee overtime regulations will effect corporations, government agencies, and non profit organizations of all sizes, but it is small business owners who will suffer the most once the new rules are implemented. The Department of Labor is expected to issue and publish the new regulations sometime in July 2016. The changes are significant, more than doubling the exemption of salaried employees from $23,660 to $54,440.
Under the proposal, the new rule would:
• raise the salary exemption from $23,660 per year to $50,440 per year. This means that an employee making less than $50,440 per year would be eligible for overtime.
• increase the total annual compensation requirement needed to exempt highly compensated employees to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually)
• annually update the salary and compensation levels of exempt employees.
HR advisors recommend steps employers should take now:
1. Identify currently exempt jobs with salaries that fall below the proposed new salary threshold for exempt employees, using $970 per week, or $50,440 per year.
2. For employees who may be reclassified as hourly employees, understand now how many hours they are working per week and determine if you can cap overtime.
3. Think about what operational changes need to happen as a result of the reclassification of employees from exempt to nonexempt like changes to job duties, changes to schedules, or changes to staffing levels.
4. For positions that often result in overtime pay, consider hiring more full-time, part-time and/or seasonal employees, or job restructuring to offset expansion of overtime pay.