Finance News & Insights

New overtime rules coming up fast: Your best ways to prepare now

Get ready: Your company will soon be working with a new salary threshold for overtime eligibility.

The Department of Labor (DOL) just sent a draft of its Notice of Proposed Rulemaking to the White House.

That’s the final step before it gets published in the Federal Register for us all to see what’s in store.

You can expect that in March. But you certainly don’t want to wait until then to get the ball rolling. Many of your peers were caught unprepared the last go-around.

And insiders have already started predicting what the threshold will land at.

That can give you a jump-start on your compliance so it’s not so disruptive when the new rules come out.

Here’s what you need to know.

Half of employees may be eligible

Again, nothing’s official just yet, but insiders from several sources believe the DOL will set the salary threshold in the low- to mid-$30,000 range.

While that would be a decent increase from the current $23,660 threshold, it’s far from the $47,476 from 2016’s final rule. And it’s better than some a few others have predicted.

But even those additional few thousand dollars will have a substantial impact on how much your company pays in overtime. In 2015, the Social Security Administration reported that more than half (51%) of Americans earn less than $30,000 a year.

That would put a large proportion of the folks on your payroll in that bucket.

3 moves to make now

Without a definitive number, what can you do now? Plenty. Take these steps in the coming weeks to start preparing:

  1. Get a gauge of who may move into OT-eligible territory. Start by having Payroll run reports of everyone who earns between the current $23,660 threshold and $30,000, $32,500 and maybe even $35,000, since we don’t have an official number just yet. At least you’ll start to get a feel for just how many more people you could be dealing with.
  2. Restart that conversation. In the coming weeks you and the rest of the C-suite will want to revisit how you’re going to handle employees who will soon fall under this new threshold, whether that’s bump up pay so employees won’t land in that new bucket or adjusting workloads so less overtime’s required. Some of these decisions may be on a case-by-case basis, but you’ll want to get your options laid out for now.
  3. Prep for a flood of employee questions. You know the minute the proposed rules hit the news, employees are going to flood you with questions. The time to prepare responses is now so when folks start asking, you and your team will have answers, even if you don’t have everything ironed out just yet.

Stay tuned. CFO Daily News will update you the second the proposed rules get released.

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