Do you have employees within a salary range of $23,000 to $50,000? If so, you may be impacted by a pending U.S. Department of Labor (DOL) rule changing the exempt salaries for mandated overtime pay.
Currently, an employee is exempt from overtime pay their duties primarily involve executive, administrative or professional tasks, and if they are paid a minimum salary of $455 per week.
Rule changes pending in the DOL would raise that minimum salary to $970 per week ($50,440 per year).
The Northern Michigan Chamber Alliance wants to be a source to help you navigate the impacts of this rule and advocate for your interests.
On July 6, 2015, the U.S. Dept. of Labor (DOL) issued a notice of proposed rulemaking that would change the regulations that exempt administrative, executive, and professionals from the Fair Labor Standards Act’s minimum wage and overtime requirements.
Oftentimes, these exemptions are referred to as “white collar” exemptions.
The proposed rules would change the current salary threshold for the exemption of employees from overtime pay from $455 per week ($23,660 per year) to $970 per week ($50,440 per year). That equates to an over 100 percent increase.
It is still uncertain when the DOL will release their final rule.
It is believed that the rule will likely take effect 60 days after the final rule is released.
The Basics of Overtime Pay:
FLSA establishes that workers are generally entitled to overtime pay unless they qualify for an exemption.
- FLSA sets three statutory requirements to be considered exempt from overtime under the white collar exemption:
- Salary basis test: paid a pre-determined fixed salary.
- Salary level test: must meet minimum specified amount—currently set at $455/week.
- Duties test: must primarily involve executive, administrative or professional duties.
What Employers Should Do:
- Start now to determine the impacts and options for your business. Below are two resources to help do that.
Society for Human Resource Management “To-do” list for employers: http://www.shrm.org/legalissues/federalresources/pages/to-do-list-proposed-overtime-rule.aspx
U.S. Chamber of Commerce questionnaire: https://www.harrisburgregionalchamber.org/wp-content/uploads/Questions-to-Guide-Analysis-of-Proposed-Overtime-Regulation-Impact.pdf
2. Contact your members of Congress.
While the chances of completely stopping a rule change are slim, the business community’s best chance at effecting change is to contact our members of congress, let them know the impacts to your business, and ask them to urge President Obama to direct the Dept. of Labor to make changes that are more manageable for small businesses.