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Overtime Regulations and What They Mean for Your Company

Written by Salary.com Staff

November 18, 2016

Overtime regulations and what they mean for your company

Overtime regulations can be stressful, but they're not all bad. In fact, they can actually help you create a more productive and engaged workforce.

New federal overtime regulations go into effect on December first. The provisions to the Fair Labor Standards Act (FLSA) could have a significant impact on businesses, as many employees will now be eligible for overtime pay. Employers will need to adapt to these changes, and there are a number of questions that need answering.

To help answer these pressing questions, the Boston Business Journal recently held a Table of Experts event, and Salary.com’s own Mark Szypko, Vice President of Compensation Strategy, was there to share his expertise.

Mark and fellow panelists answered questions about the new federal overtime rules. They said that every job is non-exempt by default, and employers must prove otherwise. The new rules make it more difficult to determine exempt status, so companies need to prepare for the December 1 deadline.

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Companies have the burden proof over new overtime regulations

With the new changes to the FLSA— the first changes introduced since 2004— employers have some work to do. Proof is important because it ensures that employees are receiving proper compensaition for their work. If companies did not have proper documentation, it would be too easy for them to misclassify employees as exempt and avoid paying them overtime.

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With these new regulations, the minimum salary to be non-exempt has more than doubled from $23,660 annually to $47,476, resulting in many more employees who are eligible for overtime. But pay level isn’t the only qualification used to determine exempt or non-exempt status. To be exempt, employees must not only make more than the $47,476 threshold, but they must also receive a fixed salary not subjected to reductions based on quality or quantity of work performance. Moreover, they must also satisfy the duties test, showing that the actual duties performed in the role meet the standards for various job families.

Mark and his fellow panelists also addressed the legal issues and regulations employers should be aware of in light of the new laws. They also talked about the risks for those that fail to comply. As the deadline for accounting for these changes is right around the corner, organizations must act today to ensure they are ready.

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Tips to determine exemption

Here are some tips for companies that are trying to determine whether their employees are exempt from overtime pay:

  • Review the FLSA exemptions carefully.
  • Keep accurate records of employee hours worked.
  • Be prepared to provide documentation to support the exemption status of any employee who is challenged.

Ultimately, it is best to over-prepare than found lacking in the end. Companies that fail to pay overtime to eligible employees may be subject to back pay and other penalties.

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