In May, the Department of Labor updated the rules for paying overtime. The changes take effect December 1, 2016, and will affect 4.2 million workers across the country.
Under the new rules, salaried employees who earn less than $913 per week ($47,476 per year) will be eligible for overtime pay. That’s double the annual exempt amount of $455 per week ($23,660 per year) from previous rules.
In addition, the total annual pay for an exempt highly compensated employee is $134,004 (up from $100,000 previously). This new threshold will increase every three years beginning in 2020.
To avoid penalties and fines for noncompliance, begin reviewing your payroll now for adjustments needed. Important steps that you should take now include:
For employees who become eligible for overtime under these new rules, employers have a choice of three actions they can take:
In some cases, a business owner may find it cheaper to hire an additional part-time worker to handle work that now requires overtime hours.
You can find more about the new overtime law here.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details.
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