Effective December 1, 2016, an estimated 4.2 million workers will be eligible for overtime pay, according to the changes to the Fair Labor Standards Act (FLSA) overtime rules. Those eligible include salaried employees earning between $23,660 and $47,476, and highly compensated employees with an annual salary between $100,000 and $134,004. The new rules have more than a few large, medium and small businesses scrambling to prevent the new rules from dramatically impacting their bottom line.
“Being a salaried employee was like a blank check for owners in terms of staffing. If staff was needed to stay late or work on the weekend, a salaried employee wouldn’t cost them extra,” said Mark Kilduff, president of Remote Quality Bookkeeping. “The new rules put the onus on a company’s operations and accounting departments to track overtime hours for salaried staff, and make sure paying overtime doesn’t wipe out the bottom line.”
The new overtime rules do not affect every salaried employee. Some can be classified as exempt if they meet all of the following requirements:
- He or she is paid on a salary basis.
- He or she is paid a salary that meets or exceeds the minimum requirement.
- He or she is paid a full salary in any workweek in which he or she performs work.
- He or she performs specific job duties that are considered executive, administrative, professional, computer or outside sales.
“The good news about the new rules is that companies knew since May that these new rules were coming. The bad news for some companies is that they only had since May to prepare for this,” said Kilduff. “The better news is that the rule changes will force companies to examine their operations and books to better prepare for the coming year, and that’s always a good thing.”
For more specific details on whether or not employees are exempt, please visit the Department of Labor’s website here.
