Significant Changes to Overtime Coming

On Behalf of | Sep 1, 2015 | Corporate Law

Many clients are already familiar with the Fair Labor Standards Act (FLSA) requirements that nonexempt employees be paid overtime at the rate of one-and-one-half their regular rate of pay for every hour over 40 the employee works during a workweek. As a result of new proposed regulations from the US Department of Labor, however, who can be classified as an exempt employee (and therefore exempt from overtime pay) and a nonexempt employee (and therefore entitled to overtime pay) will change dramatically.

Most importantly, under the proposed revisions to the regulations, exempt employees will now have to be paid at least $970 per week (which amounts to $50,440 annually) in order to qualify for an exemption to overtime. Currently, the requirement is only that exempt employees be paid at least $455 per week (which amounts to only $23,660 annually).

In order to be exempt from the overtime provisions of the FLSA, employees must meet certain job duty requirements, which generally involve the use of independent judgment and direction and supervision of other employees. There are six broad categories of exemptions: administrative employees, executive employees, professional employees, outside sales employees, highly skilled computer-related employees and highly compensated employees. The final determination of whether or not an employee is entitled to overtime is always a job-duty test, however, and simply paying an employee a salary is not enough to ensure that the employee is not also entitled to overtime.

Employers have plenty of time to prepare for these new regulations. Currently, the Department of Labor is requesting that interested parties submit comments on these regulations (which are due by September 4, 2015). Clients who are interested in making comments to these proposed regulations should explain exactly how these regulations will affect their businesses, such as increased overtime costs, cuts in hours worked to prevent overtime payments, potential staffing cuts or changes and comments on the length of time necessary to conform to the new regulations.

Most importantly, you should contact the skilled employment attorneys at Richard L. Robertson and Associates, P.A., to discuss how to prepare your business for these changes and to protect yourself from wage and hour claims.