By Sheryl Rowling
SAN DIEGO — Whether you’re an employee or an employer, you could be affected by new overtime rules enacted by President Obama and the Department of Labor on May 17, 2016. Officially an update to the Fair Labor Standards Act (FSLA), the new rules will greatly expand the number of employees who qualify for overtime pay.
As of December 1, 2016, any employee earning a salary of under $47,476 is entitled to 1.5 times base pay for each hour worked in excess of 40 hours per week. The current threshold is $23,660.
What does this mean? Employers often classify employees with professional or managerial status as “exempt”, paying them salaries with no overtime compensation rather than hourly with overtime compensation. As of December, even a high-level employee will be entitled to overtime pay if his or her salary is less than $47,476 per year. So, even if your title is “Manager” or “Accountant”, your salary must be at least $47,476 or you will be entitled to overtime pay.
Employers of salaried employees earning less than this amount will have three options:
- Pay overtime compensation
- Eliminate overtime
- Raise salaries above the threshold
Are you an employee? If you’re salaried and earning less than $47,476, you might be in line for a pay raise or less overtime as of December. If you are an employer, now is the time to analyze your compensation policies.
*
Rowling is a certified public accountant, personal finance specialist, and principal of Rowling & Associates. She may be contacted via sheryl.rowling@sdjewishworld.com. Comments intended for publication in the space below must be accompanied by the letter writer’s first and last name and by his/ her city and state of residence (city and country for those outside the U.S.)