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COMPLIANCE ALERT! White-collar OT threshold doubling to more than $50K

COMPLIANCE ALERT! White-collar OT threshold doubling to more than $50K

The Obama administration today proposed more than doubling the salary threshold that makes white-collar managers eligible for overtime pay. The Department of Labor's long-awaited rewrite of the overtime rules for salaried administrative, executive and professional employees would raise the bar to $50,440 per year in 2016, up from the current $23,660.

The DOL estimates the move will make at least five million more workers eligible for overtime pay if they work more than 40 hours in a week.

The proposed rule doesn't change the duties test that defines what constitutes administrative, executive and professional work, but leaves open the possibility of doing so in the future.

Join us for a webinar on the practical impact of the DOL's newly released overtime exemption rules on how you classify employees and supervisors.

The New Overtime Rules: How to Comply, How to Prepare
Monday, July 6
1:00 p.m. to 2:15 p.m. Eastern

Business groups immediately blasted the proposed new salary basis, saying it would cost too much and cause job cuts. "There simply isn't any magic pot of money that lets employers pay more just because the government says so,” said a statement from the National Retail Federation.

"Employers will be forced to limit hours for their workers and eliminate management positions,” said Beth Milito, head attorney for the National Federation of Independent Business.

A statement from the Society for Human Resource Management said, "It is clear that this rule will affect nearly every employer in every industry and sector.”

Compensation experts predicted that employers would explore a variety of strategies to minimize overtime pay. Some employees' pay could actually decline, according to Cara Woodson Welch of the WorldatWork compensation association. "If this regulation were to be finalized, companies will be forced to move employees from exempt to nonexempt status, and the change in this status will likely limit employees' hours, wages, workplace flexibility and growth potential,” Welch said.

Register now for our July 6 webinar! You gain a clear explanation of the most highly anticipated wage & hour development of 2015.

The New Overtime Rules: How to Comply, How to Prepare
Monday, July 6
1:00 p.m. to 2:15 p.m. Eastern

The DOL will begin seeking public comments on the proposed rule after it is published in the Federal Register. The Obama administration predicts that the new rule will go into effect on Jan. 1, 2016. However, HR and business experts think final revisions could take up to a year.

In the meantime, employers face a host of questions:

  • How many of our current workers will suddenly become eligible for overtime if the proposed rule is enacted?
  • Do we have flexibility to adjust schedules and hours to minimize the impact?
  • Could we avoid having to pay overtime by using bonuses to raise compensation above the new threshold?
  • How will the proposed rule affect our hiring and promotion plans?
  • How will it affect payroll, scheduling and performance-management processes?

The Obama administration arrived at the $50,440 threshold by calculating the 40th percentile of projected 2016 weekly earnings for all full-time, salaried workers. The new salary basis works out to $970 per week, compared to $455 currently.

The proposed rule calls for annual adjustments of the salary threshold pegged to that 40th percentile standard.

For now, the rule doesn't propose changing the duties tests used to determine if a particular employee fits into exempt administrative, executive or professional categories.

Learn more about the proposed rule at

Bookmark The HR Specialist's ongoing coverage of the proposed new white-collar overtime rule at

The New Overtime Rules: How to Comply, How to Prepare
Learn the practical impact the new proposed white-collar overtime rule will have on your existing pay practices, and more.
Monday, July 6
1:00 p.m. to 2:15 p.m. Eastern

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