New Overtime Rules to Affect 9,000 South Dakotans and Their Employers This Year
Tuesday, July 12, 2016
by Kelly Weaver, Small Business Development Center Regional Director
In one of the more significant changes of labor laws in recent history, small businesses could be impacted greatly by the new overtime rules that go into effect December 1, 2016. Currently, the Fair Labor Standards Act exempts certain white collar workers from overtime requirements based on a duties test and a salary threshold. While the duties test has not changed, the salary level for this exemption will nearly double on December 1 from $455 per week to $913 per week (or $47,476 per year). It is estimated that this change will expand overtime eligibility to 4.2 million workers nationwide and over 9,000 in South Dakota.
By increasing the number of workers who are eligible for overtime when they work more than 40 hours in a week, employers will have a choice. They can 1) increase their employees’ salaries to at least the new salary threshold, 2) pay workers the overtime premium for extra hours, or 3) limit their work to 40 hours in a week.
Based on comments received from the business community, the final rule will allow up to 10 percent of the salary threshold to be met by non-discretionary bonuses, incentive pay, or commissions, provided these payments are made on at least a quarterly basis.
All employers should assess which employees may fall beneath the salary threshold and, thereby, be eligible for overtime. With this information and input from their accounting and payroll professionals, an informed decision can be made about which options are best for the organization in terms of complying with the law. Going forward, the weekly salary threshold will increase automatically every three years beginning January 1, 2020. For more information on the new overtime rules, visit the U. S. Department of Labor at www.dol.gov.
Kelly Weaver is the Regional Director of the Small Business Development Center in Aberdeen which offers free, confidential business consulting to start up and existing businesses. She can be reached at (605) 626-2565 or firstname.lastname@example.org. The Center is hosted by GROW South Dakota.
Category: GROW SD