Making Strategic Business Decisions to Comply with the Department of Labor’s New Overtime Rule

The Department of Labor has released the new Overtime Rule. As a business leader, don’t make a reactive change in order to comply.  Analyze your workforce and your customer demands to determine what makes the most sense for your business.  The changes you implement need to align with your strategic goals and initiatives.

The new regulation will take effect December 1, 2016, which allows employers approximately 200 days to ensure their compensation structure is in compliance with the minimum salary requirement for exempt employees.  The new minimum salary requirement will increase from $455 a week ($23,660 per year) to $913 a week ($47,476 per year).

This new regulation will result in many companies having to restructure some of their workforce to meet their organizational needs.  While the best decision may be to increase some of your exempt employees’ salaries to $47,476 annually, others may find the best approach to be reclassifying their exempt employees to non-exempt.  This reclassification will result in eligibility for overtime pay and also eliminate employees being able to have a flexible work schedule.  While this may seem to be the most simplistic fix, there may be morale issues that employers will need to address.  Taking away flexibility in work schedules will impact employers, employees and employees’ families.

The new rule also increases the threshold for exemption as a “highly compensated employee” (“HCE”) from $100,000 to $134,004 per year.

Understand your business goals and incorporate changes that will best support your organization.  Please contact STAR HR + Business Solutions to discuss the best options for your business needs.

More information on the new Overtime Rule can be found at:https://www.dol.gov/featured/overtime.

Email: pam.peterson@starforbusiness.com