HR Management & Compliance

DOL Close to Raising Overtime Threshold

The United States has a very large number of employment and labor laws and regulations. Compliance with these rules can often be a daunting task, especially for smaller businesses without the luxury of a full-time HR or compliance staff.overtime
In addition to the specific requirements of laws like the Americans with Disabilities Act (ADA), Family and Medical Leave Act (FMLA), Occupational Safety and Health (OSH) Act, and Fair Labor Standards Act (FLSA), among others, there are often different rules regarding which employees and which companies these rules apply to. For example, the FMLA applies to employers with at least 50 employees.

Understanding Overtime Rules

A key employment law, particularly for small businesses and those employing hourly, relatively low-paid employees, is if and when they are owed overtime pay, which is typically 1.5 times their base pay.

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So, for example, a worker earning $20/hour would be entitled to $30/hour for hours worked in excess of 40 per week.
Those extra wages can add up fast for small businesses, as can the penalties for failing to comply with those requirements. So, it’s crucial that employers have a solid understanding of if and when those rules come into play.

New Proposed Rule

That’s why a new proposed rule from the U.S. Department of Labor (DOL) is big news for these types of employers.
According to a recent article on HR Daily Advisor:

“Under the new proposed rule, employees would have to earn at least $679 a week ($35,308 a year) to be exempt from overtime pay for any hours worked over 40 in a workweek. That’s up from the current $455 a week ($23,660 a year), the level that has been in place since 2004.”

What this means for employers is that their costs for asking employees to work overtime could increase significantly if and when this rule is implemented.
This is just one example of the myriad rules and regulations impacting American businesses, and it serves as a good example of the need to stay up to date on these changes. In this case, the change will have a significant impact on staffing budgets, in addition to the risks raised for noncompliance.