Companies Bracing For Overtime Changes

Anderson says the threshold will be adjusted again every three years.

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A partner at Barnes & Thornburg LLP says companies should be spending the next few months preparing for upcoming overtime rule changes. Kathleen Anderson says companies with currently-exempt employees making less than the new threshold of $47,476 have multiple options, including increasing employee pay or switching to an hourly structure based on overtime projections. The new regulations take effect at the beginning of December.

The new rules nearly double the salary threshold for employees eligible for overtime from $23,660 to $47,476. The White House says the new rules will extend overtime eligibility to an additional 4.2 million Americans and expects them to boost wages for workers by $12 billion over the next 10 years." The National Retail Federation is calling on Congress to attempt to halt the new rules, which it was will result in companies "demoting millions of workers, undermining career advancement opportunities, and damaging employee morale."

In addition to this year’s changes, the threshold will be adjusted every three years beginning in 2020, based on the 40th percentile of salaried workers in the lowest wage-earning region of the country, which is currently the South. So, she says, companies that raise employee wages to the new threshold will be forced to do so again in three years.

Anderson says companies should now be collecting data and position information for currently-exempt employees and assessing contracts and policies tied to those workers. From there, company leaders will need to decide whether to increase employee pay, convert to an hourly structure and pay overtime, control overtime hours, realign duties or develop a strategy combining the options.

You can see a Perspectives article on the subject by Anderson by clicking here.