As I talk to employers in various industries, one of the most common misconceptions that I hear time and time again is that as long as an employee is paid salary, there is no need to worry about paying overtime. This statement is not entirely true and exposes employers to investigation, liability, and penalties.
To compound this misconception, today, the Department of Labor (DOL) final regulations were published making changes to the rules governing overtime exemptions under the Fair Labor Standards Act (FLSA). The new rule includes a significant increase to the salary threshold and automatic increases in the future.
Under the OLD rules, in order to be “exempt” from overtime under the FLSA employees must meet ALL of these requirements:
While an employee may be salaried, if they do not earn the income threshold or meet the duties test under the federal regulations to come within the exempt classifications, overtime would still be required.
The key provisions of the Final Regulations issued by the DOL on May 18, 2016, do not change the three-part test above, but they do change the salary component:
The effective date of these new regulations is December 1, 2016. These rules will have a significant impact on companies in every industry, as they now must reevaluate their employee roster, employee classifications, and their job duties. Employers and HR professionals should review their current employees immediately to determine which employees will be affected, and how and whether to reclassify the employees prior to the effective date.
The business and employment attorneys of Dalton & Tomich take your business just as seriously as you do. Lead attorney Zana Tomich is trusted by closely held family businesses and others across Michigan as an invaluable partner and counselor. We guarantee all your calls and emails will be returned within one business day so you can focus on what you do best: running your business.
Having worked with Zana for 10 years, I can attest to her professionalism, her pragmatism, and most importantly, her integrity. I always get sound, thoughtful advice and guidance. From routine filings & updates to the highly unexpected, Zana’s there to help, always responding quickly and […]Read More
Zana’s expert guidance has helped us to move forward with clarity and confidence in our business endeavors. She helped us create a new business entity, and a few years later to navigate a tricky buyout—all with a clear path forward for business growth. Her calm […]Read More
Zana’s expertise in employee law has helped us refine and build a stronger operations and hiring strategy at my company. As a business owner of a small and fast growing company, I very much appreciate Zana’s ability to always step into any situation quickly and […]Read More