New Overtime Rules – What You Need to Know

May 19, 2016
By

Category: Compliance

On Wednesday, the US Department of Labor changed the rules determining who is eligible for overtime, a change that will affect virtually every business in the country.

Under current law, if a salaried employee performing certain “white collar” job functions earns more than $23,660 a year and works more than 40 hours a week, they are not legally entitled to overtime pay, which is 1.5 times the employee’s regular rate of pay.

Beginning Dec. 1, 2016, that salary threshold will increase to $47,476 a year ($913 per week). That means if any worker in your business or organization – regardless of role or title – earns less than that amount in a year, then they will have to track their hours and you will have to pay them time-and-a-half if they work more than 40 hours in a week. Just remember, not all jobs are exempt from overtime, even if you pay an employee more than minimum salary threshold.

With this rule change, it is estimated that at least 4.2 million workers will now be eligible for overtime pay.

For employers, you essentially have three options:

  1. You can raise salaries for “white collar” employees above the $47,476 threshold so that they will be exempt from overtime.
  2. You can adjust base pay downward so that, if the employee works the same number of hours as before, the employee will get the same total compensation as before.  Note that if the employee actually works more or fewer hours than you estimated, they will make more or less money than before.  
  3. Or you can change the pay structure for those below the threshold entirely to be pure hourly work.

Whatever you choose, one thing is clear: you will have to track the hours of all employees who make less than the threshold, and accurately pay them for their work.

We believe that complying with these new overtime regulations shouldn’t dominate your time as a manager. With our Time & Attendance moduleyou can track hours for non-exempt hourly employees and sync them right up with payroll.

This is just one way that Zenefits helps companies with compliance. The Zenefits platform has compliance features throughout to help with regulations around hiring and onboarding, termination, offering benefits (Affordable Care Act) and more. If you have questions, drop our benefit advisers a line, and they can help you get started, get in compliance, and then get back to running your business.

 

About

Chris is VP of Government Relations & Partnerships at Zenefits. Chris has spent over 20 years in state, local and federal government advocacy, working recently as Director of Government Relations at Lyft and as Founder and President of The Impact Group.

Category: Compliance


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