Recently, the Department of Labor (DoL) has made some changes to their overtime regulations and these changes are expected to affect 4.2 million American workers as well as numerous employers.
With the recent revision, the number of workers who are eligible for overtime pay will increase as of December 1st, 2016. Accounting Solutions Ltd. is here to assist you and your business in adapting to these new changes. But first, it is important to understand how these new regulations with affect individuals and businesses alike:
4 Key Facts About The New Overtime Regulations
1. Substantial increase in the number of employees that qualify for overtime.
Effective December 1st, 2016, the standard salary threshold for employees who are eligible for overtime pay will increase from $455 per week to $913 per week. This equates to $23,660 per year and $47,476 per year, respectively. This is good news and many more workers will now qualify for overtime pay.
2. You can incorporate other forms of compensation.
In addition to paying salary, employers may incorporate other forms of compensation such as bonuses, incentive payments, and discretionary commissions up to 10% of the salary threshold.
3. Changes in Compensation Requirement for Highly Compensated Employees.
In order to be classified as a Highly Compensated Employee, an employee must fulfill the minimum salary requirement which has now been increased from $100,000 to $134,004. Moreover, a Highly Compensated Employee will have different IRA levels when compared to other employees.
4. Standard Overtime Salary Requirements Will Be Revised Regularly.
The standard salary level for employees who qualify for overtime pay will be automatically updated every 3 years by the Department of Labor. The salary threshold is determined according to the 40th percentile of full-timed salaried workers within the lowest income areas in the United States. The subsequent increase is expected to occur on January 1st, 2020, and the estimated salary level is $51,000.
What Will Remain Unchanged
When an employee has worked more than 40 hours in a given week, the additional hours will be considered overtime. Overtime is paid hourly as at least one and one-half times the regular pay. Employees are not required to work overtime during weekends or on holidays unless the employee has not worked more 40 hours that week.
All in all, these new changes are expected to have a positive impact on employees across America. If you’re unsure how these new regulations will affect your business, give Accounting Solutions Ltd. a call at 773-267-7500. To find more ways your business can save money, check out our blog post on 4 Big Ways an Accountant Can Save Your Business Money. We have been helping Chicago business owners achieve financial success for over 25 years and we’d like to do the same for you!