Posted On May 25, 2016
Come December, 67,000 South Carolina workers will be newly eligible for overtime pay, following a revision of federal rules governing when overtime must be paid. Employers must take steps now to prepare for this rule, which goes into effect December 1, 2016 and will impact employees’ job duties, payroll expenses, and how work is assigned.
Depending on your point of view, the U.S. Department of Labor (DOL) regulatory change is either a severe burden for businesses – especially small businesses that may have less flexibility in how work is assigned – or a long overdue revision to allow lower-paid salaried workers to catch up to the rest of the economy.
Nationwide, the DOL estimates that about 4.2 million workers could benefit from the rule. In South Carolina, it will affect approximately 30 percent of salaried workers.
Announced May 18, the change addresses the overtime pay rule that is part of the Fair Labor Standards Act (FLSA). When Congress passed the FLSA at the tail end of the Great Depression, it mandated that workers had to be paid overtime at a rate of time-and-a-half for all hours over 40 worked in a given week. Exceptions were carved into the law, including exemptions for employees who worked in executive, administrative, outside sales, or professional jobs. (The logic behind these exemptions is that with this level of responsibility comes an obligation to get your work done, regardless of the clock.)
However, in addition to proscribing a baseline for the duties these employees engaged in on a day-to-day basis, Congress said employers could exempt only those employees who were paid a minimum salary. Since 2004, the minimum salary for each of these exemptions has been $455 per week, or $23,660 per year. In addition, employees compensated over $100,000 per year (and paid a weekly salary of at least $455 per week) could be exempt regardless of their job duties.
Here is an overview of what changed
Here is what didn’t change
How to get ready
What you don’t know can hurt you
Don’t turn a blind eye toward conscientious employees who quietly put in extra hours without be asked to do so. You don’t have to ask an employee to work overtime to be liable for back pay – you merely have to tolerate it.
Check your overtime policy and make sure everyone understands what is expected, including the need for prior approval of working extra hours and not coming in early or working through lunch to catch up.
The new rule is subject to review by Congress, but the president initiated the change, and there is no expectation that congress will push back. A new administration could roll back the rule next year, but don’t count on it. Rolling back salaries for millions of Americans would be a nonstarter for any new president, regardless of how he or she might have viewed the change.
This change is here to stay, and now is the time to take stock of how your business should adjust to accommodate it.
Jessica L. Gooding is member of the Workplace Law Group in Turner Padget's Columbia, S.C., office. She may be reached at (803) 227-4338 or by email at firstname.lastname@example.org.