Are You Prepared for the Department of Labor’s New Overtime Rules?

New Federal rules going into effect December 1, 2016 require that all salaried employees paid less than $47,476 per year must receive overtime (time and a half) for work beyond 40 hours per week.

While this is not a new concept, a hefty increase (a doubling to be exact) of the minimum exempt salary from roughly $23.7K to $47.5K means that many more employees and companies will be impacted by the changes. As such, organizations need to implement proper systems now to record hours worked, including work activities outside normal business hours. This includes previously untracked tasks like responding to work-related emails at night.

While some positions are still exempt from the updated overtime rules, like outside sales reps and employees who are also business owners, companies should review their payroll before December 1 to see if any employees fall below the new minimum exempt salary.

This new rule may be seen merely as an overdue inflation adjustment, but it can also be seen as part of the government’s on-going efforts to catch up existing laws and regulations to the innovation economy. In the employment field, emerging companies have had to deal with the actions by the IRS to change independent contractors into employees, and the Department of Labor’s crackdown on unpaid interns. Recent court cases involving participants in the “gig economy,” like Uber drivers, show that the struggle to apply old laws to new business models will continue.

For more details on the application of the new overtime rule, including the effect of incentive pay on the minimum salary calculation, please read this alert from Goodwin Procter LLP (@GoodwinLaw).