DOL releases new overtime regulations

On May 17, 2016, the U.S. Department of Labor issued the new Fair Labor Standards Act overtime regulations, which will mean millions of employees who are currently exempt will, for the first time, earn overtime for any hours worked in excess of 40 during a work week.

Previously, the minimum salary level to qualify for the executive, administrative or professional exemptions was $455 weekly ($23,600 annually). Under the new regulations, an executive, administrative or professional employee must earn a salary of at least $913 weekly ($47,476 annually) or they will be entitled to overtime pay. There is another significant change concerning the salary figures. Every three years the minimum weekly and annual salary amounts will be automatically “adjusted” that means increased to track general wage increases around the country.

The new regulations are effective December 1, 2016. The Department of Labor conservatively estimates that 4.2 million employees who are now exempt will be entitled to overtime after December 1. For Oklahoma, it is estimated that 50,000 employees will be affected.

This change to overtime will have an enormous impact on employers. In addition to a potential increase in payroll costs, employers will need to evaluate existing positions to determine which employees will continue to be exempt from overtime and consider shifting work responsibilities and/or instituting staffing changes. Employees who previously did not record their time will need to report actual hours worked, if they now become entitled to overtime for the first time.

We will keep you advised of developments and will be offering a complimentary webinar designed to help employers navigate these changes and challenges.