Potential Change in Overtime Pay for Salaried Employees

The Department of Labor has proposed a new rule (DOL Proposed Rule) that would change the way overtime is paid to salaried employees. It addresses those employees that are exempt from overtime pay under the “white collar” exemption such as professional and administrative employees. Currently, in order for those employees to be exempt from overtime pay, they must be paid at least $455 a week. The proposed change would raise that amount to $921, effectively doubling the amount for exemption.

We can get caught up in the political arguments of this proposed change, but my job is to help my clients prepare for any proposed changes in the event they do become law. For many small business owners this proposed change could have a tremendous impact on their employment administration. Companies will be required to spend time and money examining their salaried employees and make a decision on 1) increasing their salary to approximately $50,000 per year, or paying them time and a half for any hours worked over 40 per week. Most of the businesses I work with do not have their salaried employees clock in and clock out, so this option would add additional administrative steps.

The bottom line is that if your company has white collar salaried employees that are not making $50,000 in annual salary, you need to take a look at how much this change could affect your bottom line.

Luke D. Bottorff
[email protected]

If you have any concerns about this change or other wage and hour law issues with your employees, contact Luke today for a free consultation.