New Overtime Regulations Coming Soon

By now, most everyone has heard that the new overtime rules go into effect in December. If you’re one of the 4.2 million people (or 12.5 million, depending on which survey you read) who will be benefiting from this new law, you’re likely rejoicing…as you should. The new law raises the salary exemption level to $47,476. This means that all employees, regardless of the company size will earn overtime if they make less than that threshold…automatically. It does not matter what type of work you do and there is no need to apply any of the exemption tests to determine if you might be classified differently. I won’t get into the various exemption tests here, or the various nuances of the legislation, but it’s important to note that even if you make more than $47,476, you might be eligible for overtime, depending on the type of work you do.

So can a law be good for employees and businesses alike? Yes. Is this one of those laws? It depends on your perspective. It’s great for employees (and employees in most cases absolutely deserve to make more for working overtime.) For businesses though, most were not objecting to raising the limit, they were objecting to the dramatic increase hitting all at once, in the tune of a 100% increase. Granted, the limits hadn’t been changed in years, but why shock the businesses with such a dramatic increase all at once. After all, it’s not their fault the limits haven’t kept pace with wages. And what businesses are most likely to get hurt by this new change? Small businesses and non-profits! Small businesses employ roughly 80% of all workers in this country.

Businesses are already getting ready for this change by ensuring that all employees are classified properly, determining how they might need to adjust schedules to reduce the overtime impact, training supervisors on how to handle the changes, and also by identifying those positions that might be split into part-time positions, where they won’t need to pay overtime at all (and those employees might actually lose benefits by being forced to a part-time status). That may not seem fair to employees, but then again, this is one more example of a change that many businesses don’t feel is fair to them. Regardless of which side you’re on, changes like these reinforce the need for businesses, employees, and government to work together to ensure it is fair for all.

If your organization hasn’t begun looking at how this change will impact them, you better get on it. Effective planning and a communication plan to affected employees are going to be critical.

By John P. Savas