Ask HR Experts – Overtime Rule Updates – How to navigate it?
Ask HR Experts: Navigating the Upcoming Overtime Rule Changes
The U.S. Department of Labor (DOL) has introduced a two-part approach to implementing its new overtime rule, raising the salary threshold level for white-collar exemptions. The threshold will increase from $35,568 to $43,888 on July 1, and further to $58,656 on January 1, 2025.
Two-Part Approach:
This staggered approach provides employers flexibility but may prompt some to address both updates simultaneously to avoid multiple adjustments. The final rule, representing a nearly 65% increase by 2025, will affect millions of workers.
Automatic Adjustment:
A three-year automatic adjustment mechanism is included for updating the salary threshold.
Who Is Affected:
Workers under the FLSA’s executive, administrative, and professional exemptions must be paid at least the threshold amount and meet certain duties tests to qualify for exemption from overtime pay. Ask HR Experts to guide you through this process.
Challenges and Considerations:
The raised thresholds may burden small businesses, potentially leading to job cuts or price increases. Employers should proceed cautiously, preparing plans for compliance while anticipating possible legal challenges.
Steps for Employers:
1. Identify exempt employees with salaries between the current and new thresholds.
2. Decide whether to increase salaries or reclassify employees as nonexempt.
3. Budget for salary and overtime expense increases.
4. Plan and train reclassified employees on new timekeeping requirements.
5. Decide on a phased or immediate implementation of the new thresholds.
State and Local Considerations:
Employers must also comply with state and local wage and hour laws, which may impose additional requirements beyond federal regulations.
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