Big Changes to the Overtime Rule Could Mean a Big Change to Your Bottom Line.
Employers across New Hampshire, Vermont and the country are about to see big changes in overtime pay. Earlier this year, President Obama signed an executive order directing the Department of Labor (DOL) to update the overtime rules under the Fair Labor Standards Act (FLSA). The most significant proposed change for employers is that any salaried employee making less than $50,440 annually will become eligible for overtime pay beginning in 2016.
The FLSA is the federal law that requires employers to pay minimum wages and overtime to employees who work more than 40 hours in a work week. The FLSA, however, exempts certain employees from the minimum wage and overtime pay requirements. To qualify for the overtime exemption, employees must a) paid on a salary basis (i.e. no change in salary regardless of hours worked); b) be paid a minimum salary level; and 3) meet all criteria of the applicable “white collar” job duties tests. There are three primary “white collar” exemptions – Executive, Administrative, Professional – and each has its own job duties test.
Regardless of job title, if an employee does not meet all of the exemption requirements, the employee is non-exempt and must be paid overtime at 1.5 times his or her hourly rate for all hours worked after 40 in a week. There is a common misperception that paying an employee a salary means they are “exempt” from overtime. This is not true. Payment of a salary is only one of the requirements for exemption. All other requirements must be met for an employee to be exempt from the overtime pay requirement.
If you’d like to learn more about how this change to the FLSA could impact you, visit the Department of Labor’s Fact Sheet. You can get more information regarding the Executive, Administrative, Professional exempt status on the DOL website.