Just as we have all been busy trying to figure out how to deal with reporting for the Affordable Care Act, another major project for Human Resources and top management is looming. The Obama Administration has proposed updated overtime rules that could become law as early as January 2016. Under the current overtime rules employees making under $455 per week ($23,660/year) are automatically considered non-exempt and eligible for overtime. For employees above this pay level the overtime classification is based on what is called the “duties test.” The duties test is designed to determine whether a job is exempt from the overtime requirement due to classification as Executive, Administrative, Professional or Outside Sales.
Under the proposed rules changes, the compensation test would be based on a salary level equal to the 40th percentile of earnings for full-time salaried workers. That works out to $970 per week or $50,440 annually or thereabouts for 2016.
What should you be doing?
- Now is definitely time to review your current job classifications, especially those jobs that are paid between $23,660 and $50,000 per year.
- Take a look at your other policies – Do you have benefits that are different for Salaried and Hourly employees? How many employees will be affected?
- Consider what time keeping policies will need to be changed.
- Decide whether some salaries will need to change to maintain and exempt status.
Above all, you should pay attention to the news about the proposed overtime rule changes. We are now in the comment period and changes could still be made. No matter what, however, you can expect increased attention as to who should be getting overtime pay in your company.