New Overtime Pay Rules Are Coming

Last October, I wrote that employers with salaried employees were going to see a big change by the end of 2016. The change involved overtime rules related to salaried workers, and now that we have the specifics from the federal Department of Labor, it’s time to review them and for me to once again warn employers that these changes ARE A BIG DEAL.

Starting December 1st, a salaried worker must make at least $47,476 a year to be ineligible for overtime pay (right now, the threshold is $23,660). If a salaried employee makes less than the threshold amount, but works more than 40 hours a week, an employer must start paying the employee time-and-a-half for the excess hours. Calculations indicate that this change will affect roughly 20% of Wisconsin’s salaried workers.

What does this mean for employers with salaried workers? If everyone already makes at least $47,476 per year, the change won’t matter. If salaried employees make less, however, it’s decision-time for the employer. One option is to bring everyone up to the new threshold. Another option is to simply start paying overtime. A third option is to limit all of your salaried employees–or at least those that make less than the threshold—to 40 hours per week and hire part-time workers to pick up any slack. No matter what option a business chooses, it’s easy to see that the changes will affect the workplace in a major way.

And before wrapping up, I guess there is a fourth option that I know a lot of employers will choose: ignore the new rule and hope nothing bad comes of it. This is a very bad idea for a number of reasons–plaintiff-side employment attorneys are going to be all over this, a losing employer often has to pay the employee’s attorney fees in these types of cases, a wide-spread case involving multiple employees could bankrupt some businesses, just to name a few–so I would encourage any business with salaried employees to make sure they know what they are getting into this December.