Thanks to new federal overtime rules, overtime protections are about to experience a massive expansion.
Coverage of the nation’s current workforce is expected to increase by five times – from 7% of the workforce to 35%. According to the US Department of Labor, 4.2 million workers will receive an income boost.
What does this mean for employers?
The new rules don’t take effect until the first of December of this year. That gives businesses some time to adjust their practices to comply with the updated overtime rules. Companies can choose to pay time-and-a-half for overtime work, raise their workers’ salaries above the mandated threshold of $47,476 per year, reduce employees’ hours to 40 hours per week per individual, or some combination of the three. Exemptions do apply. Those who are paid on a salary basis, earn at least $455 per week and are employed in a bona fide executive, administrative or professional capacity can be exempted. While ill-defined at the moment, time and litigation will tell how these so-called exemptions will play out for businesses going forward.
New federal overtime rules by the numbers
- December 1st, 2016, is the date the new overtime rules are scheduled to take effect.
- 4.2 million more workers will receive a boost in pay, according to the Department of Labor.
- 2.4 million women, or 56% of those affected, will now be protected.
- The new rules will extend protections to 19% of the more than 22 million American workers exempt from the old, expiring rules.
- The new rules are projected to affect 370,000 workers in Texas alone.
- The new federal income threshold of $47,476 is more than double previous salary threshold.
- 53.1% of all jobs, or well over half, in West Virginia will be impacted – the most affected state in the country. Other heavily impacted states include Mississippi (52.4%), Arkansas (52.2%), Kentucky (51.1%), and Indiana (50.7%) rounding out the top five.
- Less than a third or 31.7% of all jobs will be affected in California, which will be the least impacted state.
Is your business financially and logistically ready to comply with the new federal overtime rules taking effect this year?
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