How you pay your employees overtime will change dramatically this December because of a new Department of Labor ruling that goes into effect Dec. 1. To help people understand and prepare for the changes, the area chambers of commerce hosted a free, one-hour workshop on Wednesday, July 6. Local CPA’s from Schutte & Hilgendorf, PLLC explained the primary components of the new ruling and answer your questions. What’s all the fuss about? The current threshold for employees to be eligible for overtime pay is currently $455 per week, or $23,660 annually for a full-time employee. Exempt employees over these amounts don’t currently receive overtime pay. Under the new ruling, that threshold now becomes $913 per week or $47,476 annually. That amount also has an automatic adjustment every three years. What does this mean for the business owner or manager? If you want to keep your $40,000 employee exempt, you could change the pay rate from $40,000 to $47,476 or more, but that may be more than what you budgeted. Another option is to pay that employee at an equivalent hourly rate and have the employee manage his/her time to stay within the forty hours each week. Or, pay your salaried, nonexempt employee their salary, but calculate any overtime at the equivalent hourly rate.
Click here to link to the Department of Labor’s fact sheets. These can be very helpful if you have questions about a particular industry or type of employee.