New Overtime Rule May Impact Your Business

by Julia Walther | July 28, 2016

time_freeimages-1525824-640x427In 2014, President Obama instructed the Secretary of Labor to update the overtime regulations under the Fair Labor Standards Act for the first time since 2004. The new overtime rule was recently released in May and will require certain employers to pay overtime to their salaried workers. The Department of Labor estimates that the new rule will extend overtime pay to 4.2 million more workers. Approximately 392,000 California-salaried workers are expected to be impacted by these new regulations.

Under the prior rule, employees with an annual salary below $23,660 ($455 per week) were entitled to overtime. Now the minimum salary threshold has been increased to $47,476 per year ($913 per week) for the executive, administrative and professional exemptions. Additionally, the salary threshold will be automatically updated every three years based on wage growth over time.

The new rule leaves employers with the following options:

  • Pay time and a half to employees who do not meet the threshold
  • Limit workers’ hours to 40 hours a week
  • Increase salaries above the minimum threshold

The overtime rule goes into effect December 1, 2016, so make sure you have planned accordingly.

If you have any questions or need help preparing for the changes, please contact us at (805) 963-7811.