New Federal Regulations Expand Number of Salaried Employees Entitled to Overtime Pay

Do you have a small business with two or more exempt employees and an annual gross revenue in excess of $500,000? If so, your exempt employees may soon be entitled to overtime pay.

Effective December 1, 2016, federal law will increase the minimum salary amount for exempt employees from $23,600 ($455 per week) to $47,476 ($913 per week).” Salaried employees currently earning less than this threshold salary amount and classified as exempt from overtime are now entitled to overtime pay if they work more than 40 hours/week.

It is also important to remember, that the exemption from overtime pay only applies to truly “exempt” employees under the “executive”, “administrative”, or “professional” classifications and that the new regulations narrow the existing standard for what constitutes an “exempt” employee. The burden is on the employer to establish that the employee meets this classification.

Twenty states have filed challenging the legality of these new rules, but their success is all but guaranteed. Moreover, the recent publicity about this change in the law may bring a spike in wage and hour lawsuits. Since employers remains liable for overtime pay (plus penalties) for up to three years after the wages become due, the importance of compliance cannot be overstated

What’s the takeaway? Business owners should revisit their employee compensation agreements to ensure compliance with the new regulations governing overtime pay and exemption status for salaried employees and develop a game plan to remedy any outstanding liabilities. If the lawsuits challenging the regulations are successful, then revisiting your employees’ compensation while the regulations are in flux can be viewed as a great opportunity to stay ahead of the curve by eliminating liabilities that have fallen under the radar.

(This eLegalBrief is published by the Hartnett Law Group and is intended for informational purposes only. This eLegalBrief does not create or continue any attorney-client relationship nor should it be construed or relied upon as legal advice for your specific situation)