Overtime Overhaul: Understanding the New DOL Rule

Will my business be affected by the new overtime rule?

On December 1, 2016, a new overtime rule will go into effect, impacting an anticipated four million employees and their employers.  The changes, enacted by the United States Department of Labor (DOL), will significantly increase the annual salary requirement needed for employees to be considered exempt from overtime pay.  With less than five months before all employers must comply with this new federal regulation, many are scrambling to understand what it may mean for their business.

The Final DOL Overtime Rule

The Final Rule, announced on May 18, 2016 by President Obama and Secretary Perez, can be summarized as follows:

  • The salary threshold for exempt white collar workers will increase from $23,660 a year (or $455 per week) to $47,476 a year (or $913 per week).
  • For highly compensated employees, the salary threshold will increase from $100,000 a year to $134,000 per year.
  • Employers can use non-discretionary bonuses, commissions, and incentive payments for up to 10% of the minimum salary if these amounts are paid at least quarterly. 
  • Minimum salary levels will additionally be adjusted every three years, beginning in January of 2020.

Impact on Employers

The overtime rule will require many employers to reevaluate their workforce and pay structure.  There are several steps employers can take to comply with the new regulation, including:

  • Increase their employees’ salaries to meet the new threshold;
  • Limit workers’ hours to 40 per week;
  • Convert their exempt employees to non-exempt, hourly employees;
  • Or employ a combination of the above strategies.

The DOL’s new overtime rule will present numerous challenges for many businesses as they struggle to weigh the costs of raising base salaries or reclassifying workers.  Businesses with questions about the new overtime rule should contact the South Carolina business and employment law attorneys at Willcox, Buyck & Williams.  With office locations in Florence and Myrtle Beach, we serve businesses throughout Florence, Marion, Horry, Darlington, and Georgetown Counties.  Contact us today to schedule your initial consultation by calling us in Florence at (843) 536-8050 or Myrtle Beach at (843) 461-3020.