The proposed Department of Labor (DOL) overtime rule update is nearing publication, but in the meantime, it is facing resistance from business lobbies and some congressional opposition.
Although Congress has not seen the final rule yet, it will happen after the completion of a review by the White House’s Office of Management and Budget.
Previously this was thought to be happening later this year. Now it looks as if it will be completed within the next few weeks.
Proposed DOL Will Increase Employee Overtime Costs for Businesses
The proposed rule released last summer called for changes that DOL estimated would make 4.6 million workers newly entitled to overtime protection, with average annualized direct employer costs totaling between $239.6 million and $255.3 million per year.
Under the new rule, the DOL is proposing that the minimum salary level for these exemptions be set at the 40th percentile of earnings for full-time salaried workers. This has been estimated for a 2016 level to be about $970 a week, or $50,440 a year. A new minimum annual compensation needed to qualify for the highly compensated exemption is proposed to be set at the 90th percentile.
These proposed amendments to the Fair Labor Standards Act (FLSA) regulations more than double the minimum salary level (from $23,660 to over $50,000 per year in 2016) for certain employees deemed to be exempt from overtime as administrative workers, executives, professionals, and computer employees. The amendments also increase the minimum pay level necessary to be deemed an exempt "Highly Compensated Employee" from the current $100,000 to $122,148 per year.
Time and Attendance Management and DOL Overtime Rules
The U.S. Department of Labor’s (DOL) proposed expansion of overtime protections is expected to impact millions of employees and their employers. The DOL last updated their regulations in 2004 which set the current salary threshold for exemption at $455 per week or $23,660 per year.
Under the new rule, the DOL has proposed that the minimum salary level for these exemptions be set at the 40th percentile of earnings for full-time salaried workers. This has been estimated for a new level to be about $970 a week, or $50,440 a year. A new minimum annual compensation needed to qualify for the highly compensated exemption is proposed to be set at the 90th percentile.
According to the DOL website they want to update the salary level required for exemption to ensure that the Fair Labor Standards Act’s intended overtime protections are fully implemented, and to simplify the identification of nonexempt employees, thus making the executive, administrative and professional employee exemption easier for employers and workers to understand and apply.
Where to go for Help on Payroll Management Changes and Questions
It is critical to keep your company safe and your management team informed and in compliance. If you have questions regarding this, or other HR issues and practices, let us help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.
