In the past, overtime pay was primarily limited to non-exempt employees, but the Department of Labor (DOL) has made a huge change to the Fair Labor Standards Act (FLSA) that may impact your business in a very big way.

Starting Dec. 1, 2016, all exempt employees earning less than $47,476 per year — $913 per week — will be required to receive overtime pay. In addition to being more than double the current limit of $23,660, the salary level will be updated every three years. By the first update on Jan. 1, 2020, the salary limit is expected to reach $51,000.

Start Preparing for the FLSA Overtime Rule Now

The new FLSA Overtime Rule goes into effect in less than two months, so now is the time to start preparing for it. In total, the DOL estimated it will take the 7.4 million impacted companies one hour to acclimate to the new guidelines — with a total price tag of $592.7 million — but the Society for Human Resource Management and many other groups believe that number is on the conservative side.

If your company employs any of the 4.2 million exempt workers who will soon be eligible for overtime pay, this is a huge adjustment. No matter what the job classification — including manager or professional — you will be required to pay time and a half if the person works more than 40 hours in a single workweek.

There are multiple ways to handle the new overtime rule, so now is the time to map out a plan for your organization. If your employees rarely work overtime, you’re probably fine to leave things as-is, saving up a bit of extra money in your reserves to cover any unplanned late nights. On the other hand, if your exempt staffers regularly put in more than 40 hours of work per week, you’ll probably want to weigh the cost of hiring additional staffers vs. paying exorbitant overtime fees.

For more information on the new FLSA Overtime Rule, visit the DOL website.

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