The new overtime regulations for full-time workers have passed. Employers will now be required to pay time and a half for overtime if a full-time worker makes less than $47,476 per year. While this is less than the originally proposed amount of $50,400, it it about double the previous threshold of $23,660. If an employee works more than 40 hours a week and has an annual salary of less than $47,476, employers will need to calculate and pay the additional overtime hours.
Companies have until December 1st to get in compliance with the new rules. The threshold is now set to increase every three years. This threshold is in place for employees whose salary is not generally variable; who perform administrative, professional, or executive duties; and whose salaries fall below the threshold.
One area that may be hit hard is the restaurant industry where managers meet the qualifications of performing management duties with fixed salaries and also work seasonal overtime hours. Tracking hours and employee statuses can be a nightmare if a company doesn’t have strong back office or human resources support. Businesses should update their employee manuals to account for this change as well.
We strongly recommend reviewing how businesses track employee hours for any full-time employees under this salary threshold. We also recommend ensuring that you have the human resources management in place to handle this change and tracking. This will affect many small businesses that haven’t had to deal with overtime laws in the past. Consider outsourcing this tracking function to a qualified payroll service.
If you have any questions, please don’t hesitate to contact us.
For more information and strategies, see our previous post here. Please note, the previous post contains the higher threshold that was originally proposed, but the final threshold in the regulations is $47,476.