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How Will the DOL's New OT Proposal Affect Your Small Business?

Updated: Feb 22






What are the DOL's proposed changes to overtime rules? Here's what we want you to know.


American workers continue to seek the right balance of work and leisure — and this has never been more at the forefront.


As our HR consulting team knows all too well, everyone has wildly different ways of working. You might be a workaholic who would never slow down, or work best with a clear separation between the two, and leave all things work-related at the office.


Amongst your team, there are certainly varying preferences.


But there's one thing we can all agree on:


Bum-dah-bad-ah, bum-ba-dum-dum-bah-bah-da... (cue the classic Pink Floyd baseline...)


Money!

When it comes to work, pay is a key driver. Your team may be more or less motivated by money itself, but fair compensation always matters.


If you’re like 99% of organizations we work with, you want to do the best thing for your team and customers, striking a delicate balance on how to offer maximum value and make a profit!


Still, our legislative bodies will demand, position, consider, and flip-flop between the equity of it all.


How is it possible to wrangle through every law and regulation while still keeping your small business on track?


On August 30, 2023 the Department of Labor announced that it will propose increasing the salary threshold for those who qualify for overtime pay for hours worked in excess of 40 hours in a week. Since 2016, we've had two different thresholds (up with Obama in 2016 at $47,476, back down with Trump in 2019 at $35,568).


Here are some key points on the proposal should it pass:


  • The salary threshold will increase to $1,059 per week or $55,068 per year. This means anyone who makes under this amount will automatically be classified as a non-exempt (or hourly) employee.

  • This amount will automatically be adjusted every three years.

  • Increase the total annual compensation requirement for highly compensated employees to $143,988 per year. This means that anyone who makes over that amount can be automatically classified as an exempt (or salary) employee.


What our HR consultants recommend to clients (as of September 2023)


  1. Don't sweat it! The DOL has committed to a 150-day intro period, so there's no need to worry about making any changes yet. (With the potential for legal and administrative snags, it could take longer than that.)

  2. Review your compensation practices (an HR consultant can do this) to ensure you are in alignment with current law and that each of your salaried paid positions could pass the FLSA Exemption Test

  3. Review your current pay and time-tracking procedures. If you currently have employees who are paid by salary, consider how you might integrate hourly workers into your pay system.

  4. Remember that it is always legal to pay someone by the hour, as long as they are paid properly for working beyond the standard 40-hour week. The due diligence comes when you want to make someone's salary and thus "exempt" from overtime.

  5. Work to get rid of hourly and salary stigmas, and make room for part-time executives and highly-paid professionals on an hourly basis. Work is more dynamic than ever, and the DOL doesn't even address part-time employment.

  6. Whether you work with us or someone else, we strongly suggest you have an HR presence in your organization. Our HR consulting experts always have employment law at the forefront of their minds.


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*The information and materials on this website are provided for general information purposes only and are not intended to be legal advice. We attempt to provide quality information, the law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature and may not apply to a specific factual or legal circumstance. Nothing on this website is intended to substitute for the advice of an attorney; therefore, if you require legal advice, please consult with a competent attorney licensed to practice in your jurisdiction.




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