Want To Step Up To Your FLSA Overtime Changes? You Need To Read This First


The Federal Government issued a change to FLSA laws and overtime agreements raising the salary threshold for Executive, Administrative, Professional and Computer Employees who are salaried and exempt from overtime from $455 a week to $913 a week or from $23,660 per year to $47,476 per year.  The deadline is December 1st, 2016.

Why Should I Care?

The Department of Labor itself managed to muck up its own new rules, actually.  If you’re an employee that makes under 47,476 dollars a year or a small business that pays folks less than 47,476, you’re about to be subject to the changes of these laws.

If this sounds complicated, it’s because it is.  It’s worth noting the new president-elect wants to make small-businesses exempt from the new policy.  "And there are 85 million hard working Americans who would agree with that," Trump said.  "We have to address the issues of over-taxation and over-regulation and the lack of access to credit markets to get our small business owners thriving again. Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that. We would love to see a delay or a carve-out of sorts for our small business owners."  Even though enterprise coverage applies only to businesses with $500,000 or more in annual revenue, current FLSA rules already have a small-business exemption.  The FLSA's individual coverage still applies to any employee whose work relates to interstate commerce.  

What Should I Do?

If you’re an employer watch out for these key things before December 1st.  It wouldn’t hurt to review and document any decisions you’ve made.  The change takes effect December 1—a Thursday—and Tammy McCutchen says employers will probably want to avoid reclassifying an employee as nonexempt in the middle of a workweek. Since calculating overtime would be too complicated in this short of a time span, this would be a great time to think about the way you’ve currently classified your workers:  it’s best to document your decision and the rationale you use to classify workers.  If anything, now is a great time to document your current decisions, in case an audit occurs.  

If you’re an employee, it definitely wouldn’t hurt to check out the overtime updates.  This change is relevant if you work over 40 hours a week,  period.  If you meet very specific conditions, one of those being the $455 a week payment threshold, you are "not exempt," meaning you are already eligible for overtime.  There are a variety of types of exemptions from overtime and the new rule only covers those that fall under "Executive, Administrative, Professional, Outside Sales and Computer Employees." Specific definitions of those roles can be found in the government’s Q&A.  If you're a teacher, lawyer, or doctor, the new raise in the salary threshold might not apply to you, just as the old salary threshold may not have applied to you either.  

As December 1st comes closer, be wary of any changes the new administration may put in place.  It will be unlikely that they can stop or obstruct the FLSA changes, but it’s very likely they’ll change parts of it.