Employers: U.S. Will Publish New Overtime Regs That Will Raise Overtime Salary Threshold - Global Trade Magazine
  May 16th, 2016 | Written by

Employers: U.S. Will Publish New Overtime Regs That Will Raise Overtime Salary Threshold

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  • New U.S. labor regulations will raise the salary threshold for overtime-exempt employees to $48,000.
  • Employers will have 30 to 60 days after the new overtime rule change takes effect to comply.
  • Federal wage and hour laws apply to all employers with more than $500,000 gross annual sales.

The United States Department of Labor will unveil new overtime regulations this month–an update that will raise the salary threshold for overtime-exempt employees to $48,000. Employers will have 30, possibly 60, days after the rule change takes effect to comply.

Federal wage and hour laws apply to all employers with more than $500,000 gross annual sales.

This development leaves smaller companies with an ultimatum: meet the higher minimum salary, or provide some employees with hourly pay.

The rules and their impact on payroll will surprise most small employers, according to a new Manta poll. According to the poll’s findings, small business owners lack clarity around overtime regulations in general. Fifty-one percent of small business owners said they didn’t know whether their salaried employees were exempt from overtime pay under current federal rules. Over half are unaware of the pending overtime regulations. Among those respondents, 44 percent employ both hourly and salaried staff.

Many small business owners don’t support raising the minimum salary to $50,000 or more. When asked to describe their opinion of higher salaries for overtime-exempt employees, 40 percent said they oppose raising the threshold, 24 percent neither support nor oppose the change, while 22 percent said they favor it.

Some small business owners are confident they won’t be affected by the changes. Over a third of surveyed small to medium business owners said they won’t need to make adjustments to comply with the salary requirements while 26 percent said they’d respond by paying overtime to salaried staff and 13 percent would hire part time employees to avoid overtime costs.

Experts say these federal wage and hour rules are an area where small companies with only a few employees can find pitfalls.

Small employers may misclassify employees as exempt from overtime requirements because they receive a salary and perform non-manual work. Many employers believe secretaries, assistant managers and other administrative personnel are exempt from overtime pay because they see these as white collar jobs.

But employers must tread carefully, because those positions often fail to meet the Labor Department’s overtime exemption standards.