DOL announces details of troublesome overtime rules

Written on May 18, 2016

By Amy Bonacuse, CAE, OSCPA vice president of communications & marketing

The Department of Labor has finalized new overtime rules under the Fair Labor Standards Act, ending months of speculation about how the proposal, which was introduced last July, would affect employers.

The changes do not require Congressional approval, but the Republican majorities in the House and Senate have been encouraged by The Ohio Society of CPAs and others to take action to mitigate the impact.

While the complete rules package is not yet available, key revisions include:

  • Exempt salary threshold increased to $47,476 from $23,660
  • The salary threshold will automatically update every three years, and is anticipated to top $50,000 by 2020
  • The new rules are effective Dec. 1

“We are disappointed by the Labor Department’s 100% increase to the salary threshold for overtime eligibility,” said OSCPA President & CEO Scott Wiley, CAE. “This rule will impose serious hardships on public and private sector employers and employees, which will have damaging consequences for the communities they serve. We urge Congress to support legislation to rethink overtime changes that strain employers.”

The Ohio Society of CPAs, along with 17 other state CPA societies, has joined forces with the Partnership to Protect Workplace Opportunity to oppose the DOL efforts. This national coalition of employer groups asked Congress to consider the significant, negative impact the proposed rules would have on both employers and employees if implemented.

The new rules do not:

  • Change the regulatory text for primary duty;
  • Revise the tests for the duties required of executive, administrative, or professional employees;
  • Amend the salary basis test;
  • Apply any new compensation standards to doctors, lawyers, teachers, or outside sales employees; or,
  • Make any changes to the computer professional exemption (other than the salary increase, as may be applicable).

Joelle Khouzam, partner at Bricker & Eckler LLP in Columbus, said the six months of lead time will help employers implement payroll changes.

"We were anticipating these rules any day, so now we have clarity,” Khouzam said. “The dollar threshold is slightly lower than had been proposed by the DOL, and the effective date of Dec. 1 should help employers who still have not done internal financial analyses to consider the changes they may need to make to comply. This change will impact staffing and budget, and will require employers to think about how to talk with employees whose employment classification may be affected."

White House officials said the change will expand overtime rights to 4.2 million workers who are currently excluded, and are projected to cost employers an additional $1.2 billion a year in increased wages. You can learn more about the rules here.

Also, on May 27 you can earn CPE while you learn about the rule at a webinar from HR and legal expert Scott Warrick, JD, MLHR, CEQC, SCP. For just $25 you'll get an hour-long review of both federal and state DOL minimum wage and overtime laws, and learn what impact these changes might have on employers, as well as how you can prepare. Learn more.

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