Overtime Laws Have Changed: Is Your A&F Team Ready?

Overtime Laws


On December 1, 2016, the new overtime rules under the Fair Labor Standards Act (FLSA) will take effect, and it will have drastic repercussions on the way you pay employees who are eligible for overtime. Is your team ready to navigate these new rules to ensure compliance while keeping an eye on your bottom line?


Decoding The FLSA

The FLSA governs minimum wage, overtime eligibility, recordkeeping and child labor regulations that impact full and part-time employees. Organizations covered under this umbrella include companies with at least $500,000 of business per year as well as non-profits, hospitals and residential nursing facilities, public agencies and others.


According to the FLSA, unless exempted (managers, salaried employees, etc), eligible employees that work more than 40 hours per week are entitled to overtime pay at a rate that is no less than one and a half times their regular pay rate.  In order for an employee to be considered exempt they must be salaried, paid more than a designated weekly salary level, and their duties must be primarily executive, administrative or professional in nature.


The New Requirements

On December 1, workers making an annual salary of up to $47,476 will be eligible to earn time-and-a-half after working more than 40 hours a week. That’s double the current salary cutoff of $23,660. The new rules also raise the exemption for “highly compensated employees” from $100,000 to $134,004 and allows employers to use nondiscretionary bonuses and incentive payments tied to productivity (including sales commission) to satisfy up to 10% of the standard salary level as long those payments are given out on a quarterly basis or more frequently.


How To Proceed

These changes will impact who you can label a “manager” and a host of other challenges regarding hiring, expansion, benefits offerings, work scheduling, flex time and more. Your business has the option of taking a few different tactics in the months ahead including:

  • Increasing salary to retain an employee’s exempt status.
  • Paying out more in overtime.
  • Reducing or eliminating overtime.
  • Reducing base salary (within reason) and adding pay to account for overtime.
  • Using a combination of options.

Navigating these waters will be tricky. You need to maintain your bottom line without making sweeping changes that will drastically impact the morale of your team. This should be a time for your leaders to work closely with A&F (and your legal team) to analyze labor and productivity to determine the best approach. It will take the right mix of professionals to ensure regulatory compliance and long-term employee satisfaction the options you choose. If your company is seeking top accounting and finance talent, or you want to improve your accounting and finance hiring processes, contact the expert A&F recruiters at Contemporary Staffing Solutions today.