Chronoblog
Tag: New Overtime rule
Surprise Announcement About New FLSA Rule

Surprise-Announcement-FLSA-Overtime-Ruling-DelayedJune of this year we posted about the new overtime rule in the Fair Labor Standards Act (FLSA) that was scheduled to take effect on December 1. The new rule would have impacted more than 4.2 million Americans by raising the exempt salary threshold to $47,476.  In a surprise announcement last Tuesday, November 22, 2016, U.S. District Court Judge Amos L. Mazzant granted an order temporarily barring the rule from going into effect on December 1.  He found that the 21 plaintiff States (and an additional 50 small business groups ) established standing to have their case heard.

The crux of the rule doubles the salary threshold from $23,660 to $47,476 to determine which salaried workers are eligible for overtime. Employees with salaries less than the new rate of $47,476 (or $913 a week) must be paid time-and-a-half overtime for every hour over 40.

The plaintiffs stated that the new OT rule would cause monetary damage by forcing them to substantially increase labor costs.  This could affect state services due to budget cuts and layoffs.  The States also argued that a plain reading of the FLSA shows that Congress intended the new rule for white collar workers such as, professionals, administrators, outside salespeople and executives.   And they claim the Department of Labor exceeded its authority by applying the rule to all classifications of workers based on salary alone.

The judge also struck down the provision that would automatically raise the exemption level every 3 years.

The Department of Labor can appeal the injunction to the U.S. Court of Appeals, or can litigate the issue on its merits. The incoming new administration can also make changes. For now, small businesses and state governments can hold tight, and insure that they are in compliance with the existing FLSA requirements. It may also be a good time to evaluate current pay standards in an effort to keep your best employees.

Stay tuned and stay in touch by following us on Facebook. We will provide updates as they come.

New OT Rule Makes Automated Timekeeping a Necessity

The federal government has given small business owners another reason to closely monitor and track their employees’ hours.  A new rule in the Fair Labor Standards Act (FLSA) beginning December 1, 2016 will raise the salary threshold of workers for which overtime must be paid.

In 2004 the Department of Labor 1required businesses to pay salaried workers overtime if they made less than $23,660 a year, making those workers non-exempt from overtime pay.   The new rule will almost double this threshold to $47,476, resulting in more salaried workers eligible for overtime pay.  Employees with salaries less than the new rate of $46,476 must be paid time-and-a-half overtime for every hour over 40.

An article in USA Today outlines ways companies might respond to this change.  They could continue to pay the same salary and start paying OT.  Or they could raise employees’ salaries to $47,476 to avoid OT.  Another strategy is that employees could be instructed not to work overtime, and part-time workers brought in to cover the workload.  Other businesses may cut the base pay of workers and pay OT in an attempt to keep paychecks at the same level.  Finally, salaried workers could be converted to hourly.

However you slice it, small businesses will need to accurately and efficiently monitor and track the hours of their employees.  We’ve explained before why handwritten time cards are a bad idea.  If your small business isn’t using an automated system to gather employee hours, now is the time to start.  For over 20 years we have provided business with a proven solution to control labor hours with our app-based and telephone timekeeping system.

Click here to start your free 30 day trial and get ahead of the December 1 deadline.

 

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