Updated Overtime Rules

Businesses face second deadline for higher overtime thresholds

Updated overtime rules took effect on July 1, expanding the number of employees eligible for overtime pay after working more than 40 hours a week. If a business hasn’t already made adjustments, the remainder of the year is crucial to catch up and ensure the new rules are being followed.

PHCC outlined the changes to the Fair Labor Standards Act for its members in a recent blog post: The current threshold is $35,568 annually ($684 weekly) but will be raised in steps. The first step set was the July 1 deadline that raised the threshold payroll to $43,888 annually ($844 weekly). The second step happens on Jan. 1, with threshold rising to $58,656 annually ($1,128 weekly). There are exemptions from this rule for certain executive, administrative, professional, outside sales, and computer workers.

Salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

Technicians are never exempt from the regulation, no matter how highly compensated, said Chuck White, vice president of regulatory affairs for PHCC.

Even with exemptions for some salaried workers, a close look at a company’s compensation practices is still advised. Businesses that haven’t implemented changes to comply are in jeopardy of penalties from the U.S. Department of Labor, said Brian G. Muse, an employment attorney with Sands Anderson PC in Williamsburg, Virginia.

“Penalties for misclassifying employees include a fine of up to $1,000.00, back wages (including overtime wages), liquidated damages (i.e. a penalty of double the wages owed), and attorneys fees. If a violation is considered ‘willful’ it can also lead to criminal penalties of $10,000 per violation and imprisonment,” he said.

Another risk for companies is the law generally puts the burden on an employer to disapprove a misclassified employee’s claim of hours worked, Muse said. For example, if a supervisor who no longer meets the salary threshold files a claim alleging they worked 80 hours a week the employer would need to provide evidence to contradict the claimed hours worked. This can be difficult since employers often do not track hours for salaried employees.

PHCC points out legal challenges have been filed, but there are no decisions that could halt the next step of implementation.

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