In May 2016, President Barack Obama and United States Secretary of Labor Thomas Perez unveiled new overtime pay regulations which change the Fair Labor Standards Act. The U.S. Department of Labor Final Rule automatically extends overtime pay protections to more than 4 million workers.

According to the Department of Labor, the final rule:

  • • States that employees making a salary of less than $47,476 ($913 per week) automatically qualify for overtime pay when they work more than 40 hours a week - roughly double the current $23,600 ($455 per week).
  • • Provides automatic updates to the thresholds that will occur every three years starting on January 1, 2020 to ensure full-time salaries stay at the 40th percentile of the lowest income range.
  • • Allows employers to use nondiscretionary bonuses, incentive payments and commissions to make up to 10 percent of the new standard salary minimum.

The Department of Labor estimates the rule change could result in an additional $12 billion in pay for workers over the next decade and is expected to affect the retail and restaurant industries the most. The rule also is forecasted to impact private sector industries, government offices and nonprofits.

Labor experts believe the biggest challenge with the new rule will be for small-business owners. Small-business owners who have full-time workers getting paid less than $913 per week will need to decide how to respond to the Labor Department's new rules. In the U.S. Department of Labor blog, experts have laid out some possibilities for small-business owners to comply with the new rule.

According to the Department of Labor, in response to the new overtime rule, employers can:

  • • Raise an employee's salary - an option which would keep the employee exempt from overtime, and would be ideal for employees who have salaries currently close to the new salary level and have a history of working overtime.
  • • Pay overtime in addition to the employee's current salary - for employees who have a history of rarely working overtime, employers can pay them the extra amount owed whenever they work more than 40 hours/week. This covers employees who work 40 hours or fewer but occasionally have spikes in their hours.
  • • Evaluate and realign hours and staff workloads - this can help employers ensure that workload distribution, time and staffing levels are managed appropriately.
  • • Hire more employees - employers who regularly expect more than 40 hours per week from their employees could consider hiring an additional hourly worker to pick up the extra hours.

Click here to download a PDF version of this story from The Road to Success magazine.

Sources: https://www.dol.gov/whd/overtime/final2016, Dr. David Weil, administrator of the Wage and Hour Division, Department of Labor: https://blog.dol.gov/2016/05/18/plenty-of-options-with-new-overtime-rule/

Landstar System Inc. published this content on 28 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 November 2016 00:08:50 UTC.

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