Recently, the United States Department of Labor announced it will raise the income threshold for overtime pay for salaried workers. Effective December 1, 2016, businesses must pay time-and-a-half for overtime work to employees who make $913 per week or less.
This more than doubles the previous salaried-worker overtime threshold of $455 per week and will have significant effects for small business owners. The simplest response will be to simply offer overtime pay in accordance with the new rule, but employers could also limit workers to strict 40-hour workweeks or offer salaried employees a raise that lifts their base wage above $913 per week ($47,476 annually).
While the change is six months away, we urge business owners to be proactive; have a close look at your current pay structure and payroll expenses in advance of December 1st and consult us with any concerns you might have. Depending on the nature of your employees' work and compensation agreements, there will likely be numerous solutions for your business, each with its own pros and cons. There's no getting around this new rule, but we at LMR can help you find out how to best live with it.