In House - The FindLaw Corporate Counsel Blog

Is Your Company Ready for the DOL New Overtime Rule?

It all happened a lot faster than any had anticipated -- or even hoped. The Department of Labor's proposed overtime regulations, which originated in President Obama's push to modernize federal labor laws two years ago, is just about to become reality.

"Exemption" Factors

Whether or not an employee is "exempted" is determined by a number of factors. Under the FLSA, employers must pay employees federal minimum wage and overtime for excess hours over 40 hours per week. Generally, the employees who benefit under FLSA must also provide strict records of their time so their employers can track their work hours.

Certain employees are "exempted" from these time-keeping requirements. Currently, these employees are paid at least $23,600 annually, must be salaried (not waged), and are engaging in "white collar" work.

OIRA: It's Happening Sooner Than Later

The DOL has taken the new proposals that first began as an executive memorandum from President Obama's desk to "modernize and streamline" the FLSA overtime exemptions.

Under the new proposals, that $23,600 number will basically be doubled to $50,440 and also affect more highly compensated employees from $100,000 to $122,148. Now that it's sitting in the Office or Information and Regulatory Affairs, it's estimated that review and approval will be happening sooner rather than later.

How to Get Ready

If you're in-house, you'll have to get your house in order for your company. Here are a few housekeeping pointers.

  • Find out which employees will need to be reclassified. This will cause some ruckus in the company, but that's almost unavoidable. These employees are those who are exempted from the current time rules, but make less than $50,440 per year.
  • Find a way to keep track of how many hours an employee works.
  • Discuss with your company the impact of raising pay to a new threshold, or reclassifying employees, or lowering pay to just underneath the overtime requirement.

These are just a few suggestions that you should already be thinking of. Changes in federal labor laws leave somebody unhappy. Either employers don't like the costs, or employees feel they are getting the short end of the stick. As the in house lawyer, you must counsel your company how best to weather the storm.

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