Regardless of what industry you’re in, big changes regarding employee compensation are fast approaching. The U.S. Department of Labor (DOL) has issued a rule changing the threshold governing which employees are entitled to overtime compensation. Employers across the country are scrambling to identify ways to reconfigure employees’ roles and schedules in an effort to neutralize the effect of the new rule. As we discuss the new overtime rule, ensure your Employment Practices Liability Insurance is up to date .
The Fine Print
Currently, employees who earn $455 per week ($23,660 per year) are exempt from overtime compensation. When the new DOL rule goes into effect December 1, the exemption criteria skyrockets to $913 per week ($47,476 per year). In other words, soon, many more employees will be entitled to overtime pay for any hours they work beyond 40 per week. Additionally, the rule states that employees will need to earn $134,004 to be considered highly compensated employees. That is a $34,004 increase from the current level. The DOL last changed the overtime threshold in 2004.
Big Decisions Ahead
It’s no surprise that many businesses strongly oppose the new rule. In fact, the National Retail Federation declared them a “career killers.” The fact that the new rules prohibit employers from offering comp time (future days off) in lieu of overtime pay eliminates one option businesses had to avoid overtime pay. Employers seeking to minimize the financial burden of the rules must decide if they are going to reclassify employees, adjust hiring and salary practices, or reallocate scheduling and workloads. With the right approach, the rule may have a silver lining. It could lead to improved employee morale and greater productivity.
Whenever there is a significant change in labor law and employee practices, it’s wise to reevaluate your employment practices liability coverage. Contact us at The Rubin Group, 877.806.7239 for peace of mind that your coverage is sound.