What You Need to Know About Upcoming Overtime Changes

by | Oct 31, 2016 | PKF Texas - The Entrepreneur's Playbook®



Karen: This is the PKF Texas Entrepreneur’s Playbook and I’m Karen Love; I’m the Host and Founder. I‘m here with Wilka Toppins; she is the Founder and Principle Lawyer at the Toppins Law Firm and I’d like to say welcome to the Playbook Wilka.

Wilka: Thank you very much Karen, it’s my pleasure to be here.

Karen: Thank you. Now I was astounded when I became alerted to the new overtime rules that is affecting employers and our clients I know here at PKF Texas so I thought it would be really great to have you on the show if you will to give us an overview of what’s happening this year.

Wilka: Well a lot is happening. Back in May this year – actually is was May 18, 2016 – the Department of Labor – this is federal law – the Department of Labor passed what’s called a Final Rule on overtime. It actually has a longer name but everybody calls it the Final Rule of Overtime.

Karen: Well thank you for shortening it for us.

Wilka: Yes, I think it would bore with the long name but it’s essentially called the Overtime Rule. And I wanted to point out that it hasn’t changed – over time it hasn’t really changed since 2004, so it was sort of well overdue. This rule is actually published on the Department of Labor’s website. There’s quite a bit of information but what I want employers to know is that it applies to all private employers, regardless of size, industry; regardless of if you have 1 employee or if you have thousands or hundreds of thousands of employees.

Karen: Because it’s based on salary level versus the size of the company.

Wilka: Right. Traditionally Karen, what happened is we would classify an employee as overtime eligible, meaning they get paid time and a half if they work in excess of 40 hours a week, which can be a very expensive proposition if you think about it. And you would classify them as exempt from overtime and that’s called the White Collar Exemption. So if you’re Administrative, Executive or Professional you wouldn’t get overtime, you get a salary; if you work 40 hours you get a salary, if you work 60 hours, 80 hours, you get the same salary.

That was the big difference. What the new law says is you know what, we’re going to raise the threshold of salary, almost doubling it from the existing threshold that now people will have to make to avoid paying overtime. So what happened was before if you made $23,000 you would be overtime eligible. Now in order for a person to avoid having to pay overtime the employee has to make $47,000 a year. So they doubled it.

Karen: So it raises the base salary basically, fantastic.

Wilka: For the overtime eligibility, yes.

Karen: Well, I think we need to understand more about this but I’d like to invite you to come back to our next session of Entrepreneur’s Playbook, could you do that?

Wilka: Absolutely.

Karen: Wonderful. Well thank you for being here to give us the overview, I appreciate it. This had been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook. Tune in again.

Learn more about the overtime rules by contacting Toppins Law Firm here.


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