Small Businesses Prepare for New DOL Overtime Eligibility Ruling

The Department of Labor recently issued a new regulation that will affect overtime pay eligibility for salaried workers. Beginning December 1, 2016, employees earning up to $47,476 per year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. This nearly doubles the previous threshold of $23,660, set in 2004.

The rule also updates the total annual compensation level above which employees are ineligible for overtime. The regulation raises this eligibility ceiling from $100,000 to $134,004 a year.

This ruling is causing small business owners to re-think how they handle overtime pay for employees. Some employers will cut hours to avoid exceeding the 40 hour threshold, and some may increase the salaries of certain workers to move them above the pay cutoff.

As a result, the Labor Department calculates that 4.2 million workers will become newly eligible for overtime. If you have any questions about how your company will be affected by the ruling, contact an Anders advisor.