Posted on

New overtime rule takes effect Dec. 1

In less than a month, a new rule about overtime pay will take effect, impacting an estimated 4.2 million employees who currently don’t receive time-and-a-half pay when they work more than 40 hours a week.
The change impacts the Fair Labor Standards Act of 1938, which was established to look out for the working class by regulating overtime, minimum wage, wage recordkeeping and youth employment. The Act has seen only modest changes since that time.
After President Barack Obama signed a memorandum in 2014 directing it to update its regulations about who qualifies for overtime, the U.S. Dept. of Labor worked to come up with the new overtime rule.
‘I don’t know that most employers completely understand the significance of these changes and how it might affect them,’ Lisa Long, president of the Chamber of Commerce of Harrison County, said.
She said she has received ‘very few inquiries’ about the new rule, which increases the salary exemption threshold from $455 a week to $913 a week in order to be exempt from being paid overtime.
On June 30, 2015, the Dept. of Labor released its proposed regulations. About a week later, the DOL began accepting comments. More than 270,000 responses were sent to the Dept. of Labor, which then tweaked its new regulations to include reducing the annual salary threshold from the proposed amount of about $51,000 to $47,476. The department’s final rules were published on May 16.
Long was one of several people who attended a workshop this fall at Ivy Tech Community College sponsored by Kightlinger Gray Attorneys at Law and Rodefer Moss & Co. PLLC.
Nicole York, a senior manager with Rodefer Moss, said the new overtime initiative was to update existing protections within the Fair Labor Standards Act, address the changing nature of the workplace in the United States and to make the overtime rules easier for employees and employers to understand and apply.
Attorney Laurie Goetz Kemp explained to workshop attendees the differences between non-exempt and exempt employees.
The law requires that all non-exempt employees receive overtime pay for all time worked over 40 hours in a work week, she said.
There are ‘duties tests’ that can help determine whether an employee is exempt, but, Kemp said, one’s job title does not determine that status.
The DOL’s new regulations also establish a mechanism for automatically updating the salary and compensation levels every three years, Kemp added.
Todd Garrison, an HR consultant, said at the workshop that employers should calculate their options, which include paying employees overtime, increasing employees’ salary to the new minimum level, reduce or eliminate overtime hours and restructuring their workforce.
He also suggested business owners implement a communication plan and to expect a myriad of reactions from employees, some who may see the changes as a demotion. One example he gave is a worker who was salaried but now must punch a time clock to track their hours in order to be paid.
Kemp recommended that companies have good, clear, accurate job descriptions for each employee.
‘If they haven’t been updated in eight years, throw them away,’ she said.
Long recommends employers consult with their accountants and/or payroll processing companies for guidance on how to apply the new requirements.
‘There are very strategic decisions that can be made to help mitigate the effects of the DOL changes on both employers and employees,’ she said.
Despite challenges to the Dept. of Labor’s new regulations, with some plantiffs saying the agency exceeded its authority, Garrison doesn’t think the ruling will go away.
‘I recommend you don’t walk away from it,’ he said.
Additional information can be found on the U.S. Dept. of Labor’s website at