The U.S. Department of Labor has issued new rules saying that anyone paid more than $47,476 a year will now be considered exempt from overtime. But those who fall below that number and work 40 hours a week must be paid time-and-a-half overtime for all hours beyond 40 a week.
The government estimates four million more salaried workers will be eligible for OT pay under the new rule.
Employers essentially have three choices. They can increase salaries so they’re above the threshold. They can work harder to make sure workers get their jobs done in 40 hours or less. Or they can pay the overtime.
Employers also can create bonus and incentive systems designed to boost borderline workers above the OT threshold. But employment law experts warn those bonuses have to be paid at least quarterly.
If employees are on a performance-based incentive/bonus system, they could fail to earn the bonus — thus making them eligible for overtime. Even missing one quarterly bonus can trigger overtime.
Given that many employees today, particularly at small businesses, have become accustomed to the 45- to 50-hour work week, many businesses will be facing major shifts in the way the work gets done.
About the Author
Lon is the former publisher of the Colorado Springs Business Journal and Colorado Springs Military Newspaper Group.He has served in leadership roles at various newspapers in Iowa, Florida and Wisconsin. Lon received his Bachelor of Arts in Communications from the University of Wisconsin, Eau Claire and attended the Kellogg Graduate School of Management at Northwestern University. Earlier in his career, Lon spent several years as a sea captain and held a 100-ton Coast Guard license. Lon is a former rugby player, referee and administrator and now coaches under 13 year old kids. Lon has served on the boards of numerous community and business organizations including Colorado Springs Leadership Institute, Peak Venture Group, CS Quality of Life Indicators Business Index Committee, Junior Achievement and is a member of The Colorado Thirty Group. Lon was given the “Making the Pikes Peak region a better place to live work and play” award by the CS Chamber of Commerce, was the VFW Post 1’s business citizen of the year.