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Department of Labor Releases Final Rule – Overtime Changes:

The DOL’s overtime expansion doubled the previous standard salary threshold from $455 a week (the equivalent of $23,660 annually) to $913 a week ($47,476 annually) for workers.  This action will extend overtime pay protections to an estimated 4.2 million currently classified as “Exempt Workers”, and also referred to as “Salaried Employees”:  those employees who work in administrative, professional, executive, highly compensated, outside sales, and computer professional jobs.

The Labor Department’s overtime rule simplifies and modernizes the nation’s overtime regulation − to ensure that extra work means extra pay. There is a misperception that there is only one way for employers to comply with the new overtime rule when they have white-collar employees who earn less than $47,476 per year: change them from salaried to hourly employees. This is not true.

First, employers have a wide range of options for responding to the changes to the salary level. Employers can choose the one that works best for them. Options include:

Raise salary and keep the employee exempt from overtime: Employers may choose to raise the salaries of employees to at or above the salary level to maintain their exempt status, if those employees meet the duties test (that is, the duties are truly those of an executive, administrative or professional employee). This option works for employees who have salaries close to the new salary level and regularly work overtime.

Pay overtime in addition to the employee’s current salary when necessary: Employers also can continue to pay their newly overtime-eligible employees the same salary, and pay them overtime whenever they work more than 40 hours in a week. This approach works for employees who work 40 hours or fewer in a typical workweek, but have occasional spikes that require overtime for which employers can plan and budget the extra pay during those periods. Remember that there is no requirement to convert employees from salaried to hourly in order to calculate their overtime pay!

Evaluate and realign hours and staff workload: Employers can ensure that workload distribution, time and staffing levels are all managed appropriately for their white-collar workers who earn below the salary threshold. For example, employers may hire additional workers.

Nothing in the Fair Labor Standards Act – or in the overtime rule – requires the choice between flexible work arrangements and complying with basic labor standards. There is no requirement that a worker must have a predetermined schedule, and nothing prohibits working whenever, wherever or however the worker and the employer agree.

Finally, although the FLSA requires that employers keep certain records to ensure that workers get paid the wages they earn and are owed, it’s up to the employer to choose the method that works best for them and the needs of their workforce. There’s no requirement that employees “punch in” and “punch out.” Employers have flexibility in designing systems to make sure appropriate records are kept to track the number of hours worked each day.

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