An estimated 4.2 million Americans will become eligible for overtime pay beginning December 1, 2016, thanks to an updated minimum salary level announced by the Department of Labor (DOL) earlier this year. That salary is $47,476 per year, or $913 weekly.
Certain employees are exempt from receiving overtime payments because of their earnings and their job function. These are known as the salary test and the duties test. If an employee does not meet both tests, he or she must be paid time-and-a-half for any hours worked beyond 40 per week.
So what does an employer need to do?
- Review your salaried employees to ensure that they meet the salary test of $47,476 per year. Up to 10% of that amount may be paid in the form of a non-discretionary bonus, provided the bonus is paid out at least quarterly.
- Review the job duties performed by your salaried employees. The requirements of the duties test has not changed, but many employers are not familiar with the specifics. Exempt duties include those for executive, administrative, professional, computer, or outside-sales work.
If your salaried employees meet both of the tests listed, they remain exempt from overtime pay. However, if they fail to meet either test they are considered non-exempt from overtime and their pay structure needs to be changed.
For further information, check out the DOL’s website. We also recommend contacting our office or your payroll provider. Act now and be prepared when the new rules take effect.