On May 18th, the U.S. Department of Labor (DOL) released new rules regarding the requirement for overtime pay for white collared salaried employees who do not primarily perform executive, administrative, or professional duties. The new rule takes effect on December 1, 2016. Prior to this new ruling, such employees who made more than $23,660 per year ($455 per week) were not entitled to time-and-a-half pay for hours worked in excess of 40 hours per week. These levels will be automatically increased every three years (beginning on January 1, 2020), and will be based on national salary thresholds.
Be aware that a worker whose position is grant-funded is not necessarily an independent contractor. If the organization controls the worker’s duties, that person is an employee that is subject to the new overtime rules. Also, if an employee’s job title is Manager, they may be subject to the new overtime rules, if they don’t exercise a degree of independent judgment on matters of significance to the organization.
As a result, employers will have to identify the employees who may need to be reclassified. Employers will then have to determine if they will:
- Reduce workers’ weekly hours to avoid paying overtime rates,
- Reduce pay rates on base salary and pay overtime wages for time worked in excess of 40 hours, or
- Increase their salary to the new exempt salary level.
There are certain exceptions for Non-Profit Organizations that have under $500,000 of annual gross sales from these new rules. Other exceptions may apply and the rules can become complex based on individual circumstances.
Contact us for more information.
Read the DOL publication “Overtime Final Rule and the Non-Profit Sector“.