Employers must comply with a variety of laws involving the minimum wage and overtime. As you may know, the overtime rules were going to change dramatically last year before a federal court stepped in to delay the changes. Now, the Trump administration is signaling that it may revise the current rules and is seeking feedback from the public.
Many employers have been wrestling with plans to comply with new U.S. Department of Labor (DOL) overtime rules since last May. That's when the rules were finalized, with a December 1 compliance deadline. Those new rules included raising the minimum salary overtime exemption to $913 per week from $455. A little more than a week before the deadline for the rules was to take effect, a federal court has issued an injunction, at least temporarily blocking implementation of the changes.
In its decision, the court stated it believes the DOL exceeded its authority in promulgating the rule. In addition, the court said the DOL failed to follow Congress's intent, which was to reexamine the duties test of the overtime rules, and not to focus solely on the salary level, as the final rules do.
The deadline for the Department of Labor's new final overtime rule is Dec. 1, 2016. While CFOs at most large U.S. companies have been working overtime themselves to prepare for the changes, many small and midsize firms haven't been as quick to react.
Current Overtime Rule
The Fair Labor Standards Act (FLSA) is the federal law that controls overtime pay. It requires employers to pay employees 1.5 times their regular pay rate for overtime above 40 hours a week, unless specifically exempted. The FLSA "white collar" exemptions exclude from the federal overtime rules certain executive, administrative and professional (EAP) employees and outside salespeople.
Last week, the federal government announced changes to the overtime regulations included in the Fair and Labor Standards Act (FLSA) that will affect nearly every business owner. The most significant and most talked about change is the employee wage base.
Background: The FLSA excludes certain employees from federal minimum wage and overtime requirements. To qualify for an exemption, employees generally must: (1) be salaried, meaning that they are paid a predetermined and fixed salary; (2) be paid a salary that is at least equal to a specific threshold and (3) perform the executive, administrative, or professional duties set out in Department of Labor regulations, or the so-called duties test. These employees are considered “exempt,” and federal law does not require that they be paid the minimum wage or receive overtime for hours worked over 40.