As soon as the Department of Labor finalized the terms for the new overtime protection rule under the Fair Labor Standards Act (FLSA), small to medium-sized businesses across the country returned to the strategy board to make sense of the changes and prepare themselves for the impact.
However, just last week, a federal judge in Texas blocked the rule, which was to take effect December 1, and it's possible significant changes could be made by the administration of Donald Trump, who becomes U.S. president in January, that could affect the rule.
If the DOL overtime rule does take effect at some point, it will change the way businesses pay their employees and delegate work to their talent pool. The rule would:
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Raise the salary threshold indicating eligibility from $455/week to $913/week ($47,476 per year), ensuring protections to 4.2 million workers.
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Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
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Strengthen overtime protections for salaried workers already entitled to overtime.
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Provide greater clarity for workers and employers.
Five Impacts For Your Business
1. You will need to reclassify your employees. As a result of the new overtime protection rule, awareness amongst workers is rising rapidly. Workers now know that an employee may be considered exempt only when all three criteria listed below are met:
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The worker receives a salary and not hourly wage
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The worker earns no less than $47,476 annually and $913 weekly
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The worker performs at least one duty from the EAP exemption duties test on an ongoing basis. This most prominently includes supervising an area of the business while directing other workers, undertaking jobs that require advanced knowledge and handling strictly administrative (non-manual) tasks that call for independent judgment.