Beginning on December 1st, 2016, all employers must comply with the new changes made to the overtime regulation under the Fair Labor Standards Act (FLSA). Earlier this year, the Department of Labor (DOL) revised the overtime exemption in the FLSA raising the salary threshold, more than double, from $23,660 to $47,476. An employee that makes up to this new amount - which is $913 a week - will be eligible for overtime pay beginning in December.
The new rule is said to extend overtime protection to approximately 4.2 million workers who are currently exempt under the federal law and not eligible. Further, employers are estimated to spend approximately $592.7 million to comply with the new rule, and each of the 7.4 million affected establishments will need one hour or more to make the changes needed. Additionally, the salary threshold will be updated every 3 years to stay up to date with inflation. Based on projections, the threshold will be $51,000 when it is updated in 3 years on January 1st, 2020.
President-elect Donald Trump will not be able to do much about the new rule, as it will take effect before he takes office. However, many economists and attorneys are noting that Mr. Trump may be receptive to a small-business exemption in the rule. Exempting small businesses from the rule would help small businesses and nonprofit organizations thrive, rather than be negatively impacted by the rule. Virginia attorney, Ryan Glasgow, noted that the rule already includes a small-business exemption because it only applies to businesses with more than $500,000 in annual revenue - however, it would still apply to an employee whose work is involved in interstate commerce.
Currently, a federal judge in Texas has consolidated lawsuits from twenty-one states and the U.S. Chamber of Commerce aiming to stop the overtime rule from taking effect on December 1st. The Judge is yet to rule on the matter.