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Are you ready to start paying your salaried employees overtime?

Author: Jan Fernandez    Posted: October 21, 2016

A Department of Labor (DOL) final rule is getting ready to increase the salary threshold for overtime exemptions to $47,476, with is almost double what it currently is today. The House of Representative passed a H.R. 6094 which would delay this but it would also need to be passed by the Senate and approved by the president before it becomes las and the President has threatened to veto the bill. What does that mean to us you ask? Well, Many Americans who currently enjoy the flexibility of an exempt status and can work 34 one week and 55 the next and have no change in their compensation, will not have that freedom any longer unless their wages are at least $47,476.00. For several areas in our country, Alabama, Georgia, South Carolina, for example, where the minimum wage and cost of living are so much lower than say, California or Washington. Mid-level management will now be required to punch a time clock, work a fixed schedule and not have the authority to manage their own time, or, their employer would have to increase their salary to the new threshold.

There are 21 states and several business groups that have filed lawsuits challenging the overtime rule. According to an article from the Chamber of Commerce of the United States, the Chamber is leading a broad coalition including the Texas Association of Business, National Automobile Dealers Association, the National Association of Manufacturers, National Association of Wholesaler Distributors, and the list goes on. The suit charges that, by setting an excessively high salary threshold for determining who qualifies as “executive, administrative and professional employees,” the rule departs from the intent established by Congress in the Fair Labor Standards Act and consistently administered by DOL for more than 75 years. Furthermore, DOL ignored regional and industry differences that have previously been acknowledged, resulting in a “one size fits none” salary threshold. The suit also argues that the provision to automatically update the salary threshold every three years without a rulemaking or taking input from affected parties is not authorized by the Fair Labor Standards Act or any other relevant statute.

You as an employer should be prepared to comply with the overtime final rule by Dec. 1st. We’ll keep you posted.

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