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New overtime rules creating questions, confusion for many

Less than a week ago, the U.S. Department of Labor released their much-anticipated new rules on overtime compensation. The rules are designed to do what previous versions and drafted regulations couldn't: modernize and simplify the overtime compensation system that impacts millions Americans working more than 40 hours a week.

In particular, the new rules will affect white-collar workers who make less than the threshold amount of $47,476 annually, and questions have been raised as to how employers can handle issues regarding overtime compensation and these employees. Some companies wrongfully assume that, in order to avoid complications and possible issues regarding possible underpayment or miscalculation of overtime compensation for these workers, they have to make the switch from salaried to hourly. This isn't the case, however.

Options for white-collar workers under the income threshold

As we mentioned, this rule doesn't mean that everyone making less than the income cut-off of $47,476 will no longer be salaried just because they occasionally work more than 40 hours per week. The DOL actually set out possible options to avoid underpayment issues for these workers that companies can use to create their own policies and guidelines to ensure fair overtime compensation for all.

  1. Raise salaries above the threshold in order to keep the employees salaried (without regard to overtime compensation, since salaried employees are paid a flat rate regardless of the number of hours worked in a given pay period).
  2. Pay overtime compensation at the standard time-and-a-half rate when employees go above a standard workweek; this could be the best option for workers who only occasionally work overtime, and will prevent employers from having to restructure all white-collar/professional-level employees currently classified as salaried who fall under the overtime income threshold.
  3. Impose a strict limit of 40 hours or less per workweek.
  4. Use a combination of these strategies to ensure that the company doesn't violate the new guidelines and that employees aren't being wrongfully deprived of overtime compensation.

As an employer, it is wise of you to only make salary classification decisions upon careful consideration and with the advice of counsel to avoid running afoul of the myriad federal and state-level DOL regulations in place to protect employees. As an employee, if you suspect that your employer is trying to wrongfully keep you from collecting overtime compensation in violation of these new rules - or any other employment laws - you may have legal rights to make the improper action stop and to collect the compensation you are due. Contact an experienced employment law attorney to learn more.

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