The New Overtime Rule: 5 Things Every AMC Should Know
The Department of Labor's final rule update of overtime regulations, which automatically extends overtime pay protections to over 4 million workers within the first year of implementation, will go into effect December 1, 2016. Which means there is still time to review these changes and set expectations for exempt and non-exempt employees alike. What should be on your radar now?
- The salary threshold for the full-time exempt worker is raised to $913 per week; $47,476 annually
- The Highly Compensated Threshold for full time exempt employees will be $134,004 annually
- There will be an automatic update done every three years on (1) The minimum salary level to the 40th percentile of full-time salaried workers in the lowest income region of the country and (2) The HCE threshold to the 90th percentile of full-time salaried workers nationally
- The Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new standard salary level.
- Workers not subject to a salary level test include:
b. Academic Administrative Personnel
f. Outside Sales Workersegin tracking reclassified employees' hours.
So, how do you avoid becoming a target of an employee lawsuit or a DOL audit?
- Review how your employees are currently classified, exempt vs non-exempt (salaried vs hourly) and reclassify any employees who are affected by the new regulations.
- Start paying overtime: As a result of this regulation, employers will have to pay employees that are below the new threshold for any overtime hours worked.
- Create an audit trail: If an employee reports your organization for not following this regulation, the DOL (Department of Labor) can audit your business. Use a reliable time keeping service to audit employee’s time.
- Get a time clock or web clock: Effective immediately, you should start tracking any non-exempt (hourly) employee’s time as the amount of hours they work will directly impact their compensation.
While the changes will require focus and effort, and there is no one-size-fits-all guide, the aforementioned steps can ease the process and help you avoid a last minute scramble. AMCI will be examining the rule and its implications, such as the additional tests for exempt/non-exempt employee classification, in an upcoming webinar. Watch your email for details.
Source - https://www.dol.gov/whd/overtime/final2016/index.htm
Danny Beyer is Vice President of Sales and Marketing for Kabel Business Services, a Human Capital Management (HCM) provider based in West Des Moines, IA. Kabel specializes in full payroll/HRIS outsourcing, HR consulting and outsourcing, and flexible benefit administration for businesses of all sizes throughout the United States. For more information please email firstname.lastname@example.org.