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HomeRelevant Articles3 Next-Steps You Should Take to Get Ready for the New Overtime Pay Rules


3 Next-Steps You Should Take to Get Ready for the New Overtime Pay Rules

October 3rd, 2016 Overtime-Pay-Rules3

On May 18, President Obama and Secretary of Labor Perez announced the publication of the Department of Labor’s final rule updating overtime regulations. Scheduled to go into effect on December 1, this update will automatically extend overtime pay protection to more than 4 million workers—affecting businesses of all sizes—within its first year of implementation.

What does this mean for your business?

  • The exempt annual salary threshold will jump to $47,476 ($913/week)—a more than 100% increase over the current threshold of $23,660 ($455/week).
  • The required minimum annual salary for the highly compensated employees’ exemption will increase from $100,000 to $134,004.
  • There will be NO changes to the duties test.
  • The salary threshold will be updated every 3 years and tied to the 40th percentile of full-time salaried workers in the country’s lowest wage region (currently the Southeast).
  • You have until December 1, 2016 to comply with these new requirements.

What should you do next?

With only 6 months to go until the new regulations take effect, here are 3 immediate steps you should take to get ready:

1. Identify employees who may be affected under the new rules.

Review duties and hours for executive, professional and administrative exemptions and for those who may become nonexempt. Employers will need to determine policies and procedures for overtime compensation.

2. Review and update time and attendance policies and procedures.

Having updated and effective time and attendance policies and procedures will be critical to ensuring compliance with the new regulations and applicable state rules. Companies who are not currently using a payroll service, like Payce by Deluxe, may want to consider hiring one to ensure compliance and make the transition easier. This is also an excellent time to update your employee handbook and make sure that all employees and supervisors have a current copy and understand the policies.

3. Develop and implement a training and employee communications plan.

All employees, including both staff and supervisors, will need to be trained in the new policies and procedures for documenting time and attendance and overtime approval for compensation. A system of routine audits of time and attendance should be developed and implemented. Most importantly, work with your internal communications team to develop a plan to communicate changes in the law and in policies and procedures to all of your staff at every level. Especially if certain job classifications will change, advance and ongoing communication will be critical.

Your payroll and HR service partners, like Payce, can be invaluable resources in helping your company successfully address the changes that are coming. If you have any questions, feel free to call a Payce specialist at 1-800-729-5910.