New overtime threshold may be lower than anticipated

New overtime threshold may be lower than anticipated

By on May 4, 2016 in Blog, Compensation Consulting, Compliance | 0 comments

On Monday May 2, WorldatWork.org announced according to leaked information that the proposed salary-level threshold of $50,440 may be decreased to $47,000. This is good news for employers who may have fewer employees to convert to hourly and be eligible for overtime.

When the DOL Wage and Hour Division finalizes the new overtime rules, you will have 60 days to comply and make any mandatory changes.

If some of your employees do not meet the minimum salary threshold, you will need to reclassify them as hourly and non-exempt and pay them overtime.  Keep the following in mind if you change their status:

  • You will have to instruct these employees to track their time or clock in and out so that you can be sure to pay overtime when it is worked.
  • You will need to convert their current salary to an hourly rate.
  • Don’t forget to take into account other forms of compensation such as commissions and non-discretionary bonuses which are including in the basis for calculating overtime pay.
  • Be sensitive to employee perceptions of the status change…some employees feel that being a salaried employee implies higher status, and that being classified as hourly would be a demotion. Any changes will need to be communicated to employees in a thoughtful manner to help lessen any concern or frustration.

There may be other things to do…we just won’t know until the final changes are communicated.  As soon as we know, we will make sure you know what to do.

If you have questions regarding the newly proposed overtime regulations and how they may affect your organization, visit our website to contact us and learn more about how Organizational Architecture can assist you with the upcoming proposed rules.