New Overtime Rule Announced

On May 16, 2016, the United States Department of Labor (“the DOL”) announced new rules regarding overtime pay under the Fair Labor Standards Act. These new rules go into effect on December 1, 2016.

Under the old rules, executive, administrative, and professional (“EAP”) employees were exempted from receiving overtime pay if certain tests were met. One of these tests, the “salary level test,” provided that EAP employees were exempt if they earned a weekly salary of $455 ($23,660 annually). The new rules update this amount to a weekly salary of $913 ($47,476 annually). The DOL estimates that this will extend overtime pay to an estimated 4.2 million employees who are currently exempt.

While this is good news for employees affected by the new rules, employers must consider how they will respond to the new rules. Options include raising salaries of employees in order to maintain the exemption, reorganizing workloads or adjusting schedules in order to reduce or eliminate overtime hours, or simply paying overtime to salaried employees for work in excess of 40 hours per week as required under the new rules.

For more information, or if you have any questions, contact Business Law attorney Jeffrey M. Black at (616) 458-3994 or email jblack@pmalawpc.com.

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