top of page

FAQs About the Overtime Rule Answered



With over 5,000 inquiries handled each year by Human Capital Consultants Inc. (HCCI), business owners frequently reach out to us for clarification on the new overtime rule. Here’s a summary of key points and practical advice for employers.


Understanding the New Salary Thresholds


The standard salary threshold for overtime exemption has increased. Currently, it is $684 per week, rising to $844 per week on July 1, 2024, and to $1,128 per week on January 1, 2025. From July 1, 2027, the threshold will be adjusted every three years. Employees must meet the duties test and be paid on a salary basis to qualify for the executive, administrative, or professional exemptions, commonly known as the “white-collar” exemptions.


Key Questions Answered


  • Exempt vs. Nonexempt in the Same Position: Yes, it’s possible for some employees in the same position to be exempt while others are nonexempt, provided there is a job-related reason for the difference to avoid discrimination claims.

  • Nondiscretionary Bonuses: Nondiscretionary bonuses can count towards up to 10% of the minimum salary requirement for white-collar exemptions. However, for the highly compensated employee exemption, these bonuses can satisfy the annual salary threshold but not the weekly salary requirement.

  • Highly Compensated Employee Exemption: This exemption includes both a weekly salary and an annual salary component, along with a more relaxed duties test compared to the standard exemption. The threshold is currently $107,432 annually, increasing to $132,964 on July 1, 2024, and $151,164 on January 1, 2025.

  • Salaried Nonexempt Employees: Yes, employees can be paid a salary and still be classified as nonexempt.

  • Impact on Smaller Employers: The changes do affect smaller employers. The Fair Labor Standards Act (FLSA) covers employees under “enterprise coverage” (for businesses with at least two employees and $500,000 in annual revenue) and “individual coverage” (employees involved in interstate commerce).


Compliance and Strategic Planning

Employers should review and adjust employee classifications and salary structures immediately to comply with the new rules. Implementing or updating timekeeping systems is essential for tracking overtime accurately.


Legal Landscape

Legal challenges are ongoing, and these regulations are on uncertain ground. Staying informed and adaptable is crucial for compliance.


Strategic Opportunity

This regulatory change is also an opportunity to innovate in workforce management. Employers can rethink job structures, leverage automation, and offer enhanced non-salary benefits to maintain productivity and satisfaction.


Best Practices

  • Review overtime usage and budget allocations.

  • Update job descriptions and company policies.

  • Communicate changes effectively to employees, explaining the reasons and benefits of these adjustments.


Conclusion

The new overtime regulations require immediate action and strategic foresight. Employers should use this change as an opportunity to enhance their workforce strategies and ensure compliance.


HCCI℠ Can Help


Regulatory activity could add to what already might be a sizable list of compliance obligations your business has to keep up with. HCCI will continue to monitor this topic. Your business should be prepared, and HCCI HR solutions can help. We offer compliance support to help keep you up to date on laws and regulations and an HR Professional who can provide proactive HR advice that might help you to develop a strategy, including assessments and updates to policies and procedures, so you can ultimately stay focused on your business.



This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice, and is not guaranteed to be complete, correct, or up-to-date.

5 views0 comments

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page