Most salaried employees and employers don’t give much thought to overtime pay. That’s because, since 2004, employees making over $455 per week or $23,660 a year were exempt from receiving overtime. But starting later this year, the overtime pay thresholds will be changing pretty drastically.

Starting December 1st, 2016, the salary threshold for overtime exemption is anyone making over $913 a week or $47,476 a year.  Nonexempt employees (salaried workers making less than $47,476) will be legally entitled to time-and-a-half pay if they work over 40 hours a week. For employees making more than $47,476, things start to get complicated because of exemptions granted based on your work function.  If you make more than $134,004 (an increase from $100,000 effective December 1), you probably don’t have to worry about asking your boss for overtime because these new FLSA rules do not apply to you.

Business owners should take steps now to determine which exemption class their employees fall into if any. They are: Executive Exemption, Professional Exemption or Administrative Exemption.  It should be noted that job title does not play a role in the exemption status of an employee.  If an employee does not fit into one of these exception classes AND they currently make less than $47,476, the employer will be required to pay them overtime.        

As a business owner, what do you do if you have employees making less than $47,476?  First, start planning your budget early.  Then, consider making the following changes:

  • Raise salaries above the new threshold to maintain exempt status for employees.
  • Ensure you have the budget to pay additional overtime for employees starting December 1st, 2016.
  • Determine which tasks can be redistributed to other employees or eliminated entirely.