Recently the Department of Labor (DOL) issued a final overtime rule that may impact how and what an employer pays their employees. This rule has raised the salary threshold to determine if a salaried employee is eligible to receive overtime. According to the Department of Labor, the annual threshold is currently $23,660 for a full-time employee. Anyone earning over that does not receive overtime for working over 40 hours a week. Starting December 1, 2016, this amount has been raised to $47,476.
DOL Overtime Rule - Does it Affect You and Your Healthcare Organization?
If you are unsure if this rule applies to your organization, the Fair Labor Standards Act has addressed what businesses are included. If your company has annual sales of $500,000 or more, you must comply with this new regulation. There are some exceptions to this. If your company is a hospital, provides residents with medical care, is a school, or a government agency, you are required to follow this law regardless of the amount of annual sales your company generates.
Non-Profits are not exempt from this law, although there are additional criteria that should be considered in determining the annual sales. Non-profits do not need to include the charitable contributions or membership dues they received during the year towards the total sales amount. They should only include amounts generated from regular business functions.
What are my next steps?
Once you have determined if your company is impacted by this law, you then need to decide what to do with the employees who will be affected. Although hourly employees do not need to be considered at all in this new rule, you will need to focus your attention on the salaried employees currently earning under the increased annual threshold. You can choose to raise salaries, or to pay overtime for hours worked over the 40 hours a week for the salaried employees.
Even though this rule does not go into effect until December 1st, do not wait until then to start thinking about how this will affect your company. This will influence financial budgeting for the next year, so being proactive will help avoid any surprises this new law may bring. If a non-profit organization receives set amounts of funding each year, the impact the additional wages will have on your funds needs to be considered. There are different options a company can choose to handle this change, and these will need to be determined and discussed with the employee beforehand to avoid any problems at the end of the year.