Last week was a BUSY week in the world of employment law. I equate it to a category 5 hurricane for meteorologists.  

So let’s talk about overtime.  Last week the Department of Labor (DOL) issued its Final Rule: Restoring and Extending Overtime Protections. Let’s talk about what the DOL’s Final Rule means to you. Have we been here before? Oh yes, like 3 other times. But this time, it’s for realz.         

In a nutshell, the new overtime rules will require you to evaluate your workforce, make some pretty significant decisions, and adjust your pay practices so that you are in compliance.

The new rule increased the salary threshold for the “white collar exemptions.” Who is considered a “white collar exemption?” Those who meet these three tests:

1. are paid a predetermined, fixed salary
2. are paid at least a specified weekly salary level; and
3. primarily perform executive, administrative, or professional duties

What is the current threshold? $35,568 ($684/week)

What is the new threshold?

$43,888 ($844/week) by July 1 AND then another increase to $58,656 ($1,128/week) by Jan 2025. And more good news! The salary threshold will automatically increase every three years beginning in 2027.

Is there also an impact to highly compensated employees?

Why yes, there is. The highly compensated exemption will rise to $132,964 by July 1 and then to $151,164 by January 1, 2025.

What can I do?

1. Call us. No, kidding (not kidding). First look at your workforce that is paid on a salaried basis.
2. Then examine the duties they perform against the “white collar exemption.”
3. Review the Small Entity Compliance Guide – if that applies to you.
4. Then MAKE STRATEGIC DECISIONS

All kidding aside, it is a good time to review your workforce, the duties they perform, and the rate of pay (based on how the DOL defines it which includes nondiscretionary bonuses, commissions, payments for undesirable shifts or duties, and some non-cash payments depending on the circumstances); look at your benefits and the thresholds you have in place to qualify for different benefits – they may need to be adjusted.

You may also need to adjust handbooks and provide training to new managers. Lastly, consider your workplace culture and employee morale. Make a plan on how to deliver messages and have conversations with staff.

And, if you have more questions, the DOL issued the handy FAQ.

This is a big change (which may be challenged, so stay tuned). 

If this seems overwhelming, we can help. For more information about this rule and how it may impact your business, contact Loutel at (215) 464-6007.