On December 1, 2016, the required salary threshold for an employee to be exempt from overtime pay will increase from $23,660.00 per year ($455 per week) to $47,476.00 per year ($921 per week).
This means that employees who are currently exempt from overtime pay as administrative, executive, and professional employees and earn less than $47,476.00 per year will be reclassified as non-exempt and will have to be paid overtime for all hours worked in excess of 40 hours a week.
Employers have several options to deal with currently exempt employees whose salaries fall below the new salary threshold. For example, employers may increase salaries to the threshold amount to maintain the exemption, pay increased overtime costs, eliminate overtime hours, or reduce salaries to account for the new overtime pay employees will earn. The right course of action will vary from company to company and depend upon how many currently exempt employees work overtime and how much necessary overtime they work. If your company has any questions about complying with the Fair Labor Standards Act due to this change, please contact us.