The US Department of Labor, which has Federal enforcement responsibility for the Fair Labor Standards Act’s (FLSA) regulations announced in May of this year that revised guidelines, governing employees’ eligibility for overtime pay, will become effective December 1, 2016. I have received inquiries from family members and friends who do not fully understand the revised FLSA regulations and how they could affect them. One inquiry in particular that I received resulted from an employer’s decision to take a blanket approach to compliance by classifying formerly exempt employees as non-exempt, although their annual salary is above the new $47, 476 salary threshold. I will try to explain the changes to the Law in a clear and concise manner. Let us look at each change:
- The determination regarding an employee’s eligibility for overtime pay is made based on both the employee’s annual salary amount and the type of work that they do.
- Currently, until November 30, 2016, covered employees whose annual base salary (without bonuses and/or overtime pay) is less than $23,660, are eligible to receive overtime pay.
- Beginning December 1, 2016, anyone whose annual salary is less than $47,476 will be classified as hourly-paid, covered non-exempt employees and will be eligible to receive overtime pay for hours worked over forty (40) in a work week.
- First, the biggest change to the Law will be in the annual salary portion of the determination that is used to determine if employees are eligible for overtime pay.
- Most employees who are not eligible to receive overtime pay are classified as exempt from overtime pay standards. Most employees who are eligible to receive overtime pay are classified as non-exempt from overtime pay standards.
- Covered employees who are eligible to receive overtime pay, must be paid at least one and one-half times (aka “a time and a half”) their regular hourly pay rate for each overtime hour worked.
- As with almost anything else, some exceptions do apply (i.e., law enforcement personnel and firefighters, etc.)
- A bill that would delay the effective date of these changes to the overtime pay standards for six (6) months in under consideration.
If you are an employee whose base salary (annual pay without bonuses and overtime pay) is less than $47,476 regulations may affect you, I encourage you to ask questions. You may also visit the US Department of Labor’s website at www.dol.gov and/or the Society for Human Resources Management’s (SHRM) website at www.shrm.org for more resources on this topic.
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