Last fall, the US Department of Labor issued a final rule that just went into effect on the first of this year that would raise the minimum salary threshold that workers must be paid in order to be exempt from overtime requirements.
The measure, which modified the Fair Labor Standards Act we all know and love (note sarcasm), raises the minimum salary level from $455 to $684 per week, which equates to $35, 568 from $23,660. However, it should be noted that the rule applies only to employees who primarily perform administrative, executive, or professional duties. As a reminder, non-exempt employees are eligible to receive overtime pay at a rate of at least time-and-a-half (so 1.5 times their regular pay) for any time worked over the 40-hour week-long work period.
In order to swiftly implement the change and come into compliance with the new requirements, we at Abel HR recommend that you:
- Determine which and how many employees will be affected by the change based on the above criteria.
- Next, you’ll want to perform a salary analysis and determine whether it would be more cost effective to raise the salaries of those impacted by the change or reclassify them as non-exempt and thus make them eligible for the overtime pay scale we mentioned above.
- If you don’t have wiggle room in the salary department, you could consider adjusting schedules to better distribute the workload and cut back on the potential for overtime among your non-exempt workers.
- Of course, you’ll want to formalize any reclassifications and resultant pay increases or other changes for your HR and ensure that the changes will be reflected in your timekeeping and payroll systems.
- Finally, if you have folks transitioning over to non-exempt status, be sure that you provide training on any changes they will need to know in order to accurately log their hours in the timekeeping system. Now is also a good time to remind them about what constitutes work (since responding to emails or taking work calls “off the clock” can now be billed) and communicate decisions about whether you want them to continue to work in this capacity.
To read the original announcement from the DOL in full, click here.
And while we’re on the topic of pay, now feels like a good time to mention that several states have enacted legislation changing the minimum wage employees can be paid. For a full list of the changes, click here for the National Conference of State Legislature’s comprehensive run-down.
Feeling unsure about how to implement these changes? If you’re already a client of Abel, trust that we are already on top of it and will be happy to walk you through the process and show you the changes we’re making on our end to ensure your compliance with the new rules. If you’re not yet a treasured member, give us a call and we will be happy to discuss this particular change and how a PEO like us can manage this change and all future changes to pay regulations with nary a problem! Call us at 800-400-1968
