Effective December 1, 2016, salaried employees in Florida may become eligible for overtime pay. The Department of Labor has enacted a new overtime rule under the Fair Labor Standards Act (FLSA). The new regulation will extend overtime pay protections to over 4 million workers. Read on to learn more about the new overtime rule and how to prepare for the upcoming requirements.
New Overtime Rule Overview
Currently, employees who make less than $23,660 per year ($455 per week) are eligible for overtime payment. An employee earns time-and-a-half for all the work he/she performs in excess of 40 hours per week. Under the new overtime rule, all employees covered under the FLSA who make less than $47,476 per year ($913 per week) is entitled to overtime payment. Employers can use non-discretionary bonuses and incentive payments (this includes commissions) to satisfy up to 10% of the new standard salary level.
Some executive, administrative, or professional employees (often called “EAP occupations”) are not subject to the mandatory salary level requirement (example – doctors, lawyers, teachers, outside sales). For example, so long as the employee passes the a specific duties test, and is paid more than the mandatory weekly minimum, the employee will qualify for an exemption to the overtime rule regardless of how much they earn.
Certain industries throughout Florida will be certainly impacted by the new rule. In particular, colleges, non-profits, and retail businesses will have to implement new procedures to ensure personnel receive the correct pay. Former salaried employees who now earn less than $47,476 per year must now be classified as hourly employees. Business owners will have to inform new hourly workers of the overtime requirements.
To maintain normal operations, employers could raise exempt employees salaries at or above the new mandatory salary level. This scenario works best for exempt employees who have income close to the mandatory salary level. Employers could also choose to pay reclassified hourly employees overtime. This scenario works best for businesses that require employees to work overtime on a seasonal basis. Lastly, employers can limit employee hours to 40 hours per week. This will ensure no overtime expenses are incurred.
The new salary threshold for overtime pay will be reviewed every three years. I invite you to contact my law office for more information about the new overtime pay requirement. I can help you draft new policies and procedures to implement the new rule. Not following the new overtime requirements could potentially result in employees taking legal action against your business.