Effective December 1, 2016, anyone with a salary less than $47,476 per year is entitled to overtime pay whenever their weekly hours exceed 40. This more than doubles the present salary cap of $23,660. As a result, nearly 4.2 million more salaried employees will qualify for overtime pay.
In 1975, 62 percent of salaried workers qualified for overtime pay compared with 7 percent in recent years. Under the new law, according to Secretary of Labor Thomas Perez, 35 percent of workers will be eligible for overtime pay.
Many employers have expressed concerns over this new law. Ultimately, employers can address the law the following ways:
- Pay time-and-a-half for overtime work;
- Raise salaries above the new threshold; and/or
- Limit employees to 40 hours per week and hire part-time employees to cover the extra hours needed.
Further, employers should note that nondiscretionary bonuses and incentive payments (e.g., commissions) can be used to satisfy up to 10 percent of the salary threshold.
The salary threshold will be updated every three years.
We are excited to be a part of Chattanooga Neighborhood Enterprise's Mini-Money School on November 18th. This event will cover popular money-related topics ranging from fixing your credit score, estate planning, and saving for your retirement. Register online here.
Join us on October 17th for Speed Learning: Startup Week edition, hosted by The Chattery. During this event, I'll be challenged with squeezing in valuable information for your small business within 8 minutes.