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Proposed overtime rule changes may be coming

Proposed overtime rule changes may be coming

By on Mar 29, 2022 in Blog, Compensation Consulting, Compliance, HR Consulting, Human Resources consulting |

The Society for Human Resource Management recently shared that changes to whom is eligible for overtime may be implemented soon.

Currently, employees who make below $684 per week [$35,568 per year and $17.10 per hour] are automatically eligible for overtime and cannot be exempted regardless of their job duties.  The proposed changes would change this to $913 per week [$47,476 per year and $22.83 per hour]. This is known as the ‘salary threshold’ test.

There are also what are known as the ‘duties’ tests to determine if a job is exempt from overtime.  If a job pays more than the salary threshold, there are additional tests to ascertain if the position can be exempted from overtime.  There may be some changes to the definitions used in these tests in addition to a new salary threshold.

The white-collar exemptions tests are:

  1. Executive exemption
  2. Administrative exemption
  3. Professional exemption

Remember, it is important for employers to understand that the salary and appropriate duties tests must be met completely for a position to be classified as exempt from overtime. You cannot classify employees as exempt from overtime because it is more convenient for you to pay a flat salary and no overtime.  You cannot rely on the title alone…you must look at the content of the job.  So making a position a ‘manager’ does not qualify it for exemption if there are no actual staff management duties.

Also, you cannot classify an employee as exempt because they wish to be classified that way. We understand that some people perceive being paid a salary and not receiving overtime is of a higher status than being paid hourly and required to punch a time clock. Regardless, if the position does not meet the salary and appropriate duties test, they employee/role must be classified as non-exempt.

As of yet, there is no date as to when the changes may occur and what they will be, but it would be prudent to review your employee classifications and perform an analysis of the possible impact to your organization.

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