New Federal Rule Increases Employee Eligibility for Overtime Pay

In a March 17, 2016 press release, the White House announced that the Department of Labor will issue a final rule today that will expand workers’ eligibility to receive overtime pay (time-and-a-half). Under the prior rule, only workers making a salary of less than $23,660 per year ($455 weekly) qualified to receive overtime pay when working over 40 hours in a week. The new rule will increase the salary threshold to $47,476 per year ($913 weekly), thus expanding coverage to over four million workers nationwide, and approximately 185,000 Pennsylvanians. We expect that restaurant/hospitality employers and retailers will be impacted the most, but all employers may be impacted depending on the current payment structure of their workforce.

Employers have six months to prepare for the final rule, which goes into effect on December 1, 2016. Options include raising an employee’s salary to keep the employee exempt from overtime, payment of time-and-a-half when necessary, or evaluation and realignment of hours and staff workload.

For more information, here’s a list of resources from the United States Department of Labor that will answer common questions about the new rule:

• A blog post and YouTube video from the Department of Labor explaining the changes.
• Plenty of Options with New Overtime Rule, which explains employer implementation options.
• Who Benefits from the New Overtime Rule, which includes demographic information about the impact of the rule.
• The full text of the final rule.

The impact on your business may be minimal if your employees are compensated hourly and already receive overtime pay, or if salaries are already in excess of $47,476 per year, however if your employees are salaried in the range between the former threshold of $23,660 and the new threshold, some careful planning will need to occur prior to December 1, 2016.

In the coming weeks we will post additional information to help determine whether your employees are exempt from the overtime requirement and strategies to address the adoption of the new overtime rule.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and works regularly with business owners and entrepreneurs.