New Federal Overtime Rules May Affect Your Company’s Payroll

overtime, Naperville business lawyerAs a business owner, you rely on your employees to help keep your customers satisfied and help further your vision for the company. To that end, you probably realize the importance of keeping your employees happy with competitive wages, benefit packages, and reasonable vacation policies.

In my practice as a business law attorney, I have helped hundreds of clients develop compensation structures that balance the needs of the company with those of hired employees. I also recognize how important it is for business owners to remain compliant with federal labor and employment laws. This past spring, the White House and the Department of Labor announced new compensation guidelines set to take effect on December 1, 2016. These new rules will affect employers nationwide so you need to be prepared.

More Employees Qualify for Overtime

Under the existing guidelines, a salaried worker could be exempt from overtime requirements if he or she makes at least $23,660 per year. A salary of this amount is equivalent to about $455 per week. His or her job duties must meet the federal guidelines as executive, professional, or administrative in nature to qualify as well.

Beginning December 1, however, the minimum salary for a non-exempt employee is be increased dramatically. The new standard will be $47,476 per year or $913 per week—more than double the current minimum. According to U.S. Labor Secretary Thomas Perez, the new guideline will make about 35 percent of salaried workers eligible for overtime compared to the 7 percent who are currently eligible.

Options for Employers

In order to remain compliant with the new regulations, employers have several choices, including:

  • Shifting previously exempt employees who make less than $47,476 to hourly pay, and paying them overtime;
  • Giving a raise to exempt employees to push their salaries above the minimum threshold;
  • Controlling work hours to prevent newly non-exempt workers from working overtime; and
  • Recalculating employees’ base hourly pay to offset the overtime they are working and continue to work.

The last option, however, could quickly backfire on an employer, as employees who feel that they are being taken advantage of are not likely to remain in a company’s employ for very long. Experts believe that employers who choose this route will probably see increased turnover very quickly.

We Can Help

If you are looking for guidance in creating new compensation policies that are compliant with the new regulations, contact an experienced Naperville business law attorney. Call The Gierach Law Firm at 630-756-1160 for a confidential consultation today. We look forward to helping you and your business succeed well into the future.



CNN Money

Fair Labor and Standards Act

National Law Review