Department Of Labor Proposes Rule Extending Overtime To Salaried Workers
Employers everywhere should make note of a rule recently proposed by the U.S. Department of Labor that would guarantee overtime pay for millions of relatively low-paid, white-collar salaried workers. As our Washington, DC business litigation can tell you, current rules exempt salaried employees in executive, administrative, and professional (EAP) positions from overtime pay if they are paid at least $684 a week or the equivalent of $35,568 annually.
What Does This Mean?
Under the proposed rule, the DOL would bump up the salary level for exempt EAP employees to cover the top 65 percent of full-time salaried workers in the lowest-wage Census Region (currently the South). This means any EAP worker earning less than $1,059 a week (or $55,068 annually) would be entitled to overtime pay.
Additionally, the new rule would update earnings thresholds every three years using current wage data.
Though this is only a proposed rule, it would be wise to talk to an attorney and review your own policies to ensure you’re properly categorizing your employees, paying overtime to all workers entitled to it under the federal Fair Labor Standards Act, and identifying anybody who is currently exempt but would not be under the proposed rule. FLSA violations can be costly — with the employer being ordered to pay fines, back wages, damages, attorneys’ fees, and court costs — so a bit of foresight can go a long way.
The Benefits For Your Business
Extending overtime opportunities to salaried workers can offer several benefits to businesses. While traditionally, overtime pay has been associated with hourly employees, there are compelling reasons to consider extending these benefits to salaried workers as well.
- Increased Productivity: When salaried employees are motivated by the prospect of earning extra money for their overtime hours, they are likely to be more productive and committed to their tasks. This can lead to higher efficiency and output.
- Flexibility: Offering overtime to salaried employees provides greater flexibility in managing workloads during peak periods. Businesses can meet increased demand without the need to hire additional staff, saving on recruitment and training costs.
- Employee Retention: Providing overtime opportunities can improve employee satisfaction and retention. When employees feel that their hard work is rewarded, they are more likely to stay with the company, reducing turnover rates and associated costs.
- Cost-Effective: Overtime for salaried workers can be more cost-effective than hiring temporary or part-time employees. It eliminates the need for additional benefits, such as healthcare and retirement contributions, which are typically associated with full-time hires.
- Improved Work-Life Balance: While overtime can increase work hours, offering it to salaried employees in a controlled manner allows for better work-life balance. Employees can choose when they want to work extra hours, aligning with their personal commitments.
- Enhanced Talent Pool: Attracting top talent becomes easier when a company offers the opportunity for additional income through overtime. It can make the organization more appealing to potential employees.
It’s essential to strike a balance between providing overtime opportunities and ensuring that employees maintain a healthy work-life balance to reap the full benefits of this approach. If you are interested in learning more, reach out to the team you can trust at Mahdavi, Bacon, Halfhill & Young, PLLC.