The United States Department of Labor (“USDOL”) will raise its white-collar exemption threshold for overtime pay for salaried employees to $47,000 on December 1, 2016.
The Fair Standard Labor Act (“FLSA”) was the original congressional act that implemented overtime pay for salaried employees. The idea is that if you work more than the standard 40 hours per week (a full-time job), you receive extra compensation.
However, the “white-collar” exception to the overtime pay rule states that an employer does not have to pay overtime compensation to employees whose salaries are above a mandated thresholdand whose tasks are primarily “executive, administrative, or professional” in nature. FLSA originally instituted an overtime pay threshold of $13,000 per year. In 2004, the threshold was raised for the first time to $23,660 per year. In Spring 2016, the USDOL announced that it will raise the overtime pay threshold amount a second time.
What does this mean for your business?Beginning December 1, the USDOL will require that any full-time salaried employee making pre-tax earnings of less than $47,476 a year($913 per week)eligible for overtime pay. The mandate means more employees will fall under the threshold and will be eligible for overtime pay–35% of all full-time salaried workers in the U.S. will be eligible.
What can your business do to prepare?Here are three options: (1) raise your employees’ salaries to at least $47,476 per year; (2) prepare to pay overtime wages; or (3) engage Employee Pooling (“EP”)at $23,700 per full-time equivalent (FTE) and use the savings to give raises to your most valuable employees and free your employee to make all your customers feel like VIPs.
EP has made your necessities its core competencies.Your core competency is recruiting, maintaining and organically growing your agent base (distribution)– every other action is a distraction.