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What You Need to Know About FLSA’s Overtime Rule Changes

July 05th, 2016
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If you are responsible for managing employees in the light industrial and manufacturing industry, you need to be aware of the upcoming changes to the Fair Labor Standards Act this December. The U.S. Department of Labor published changes to the overtime rule that will go into effect on December 1, 2016. This new rule will affect approximately 4.2 million employees who are currently exempt from receiving overtime pay, which means some of your employees may now be due overtime wages.

Here are some important things you need to know about FLSA’s overtime rule changes:

Changes in Salary Threshold

Under the new rules, employees who are now exempt (not eligible for overtime) are those that earn under $47,476. Previously, the exemption applied to those that earned below $23,660. This means that some of your managers and other leadership positions at your manufacturing company or industrial plant will now be eligible for overtime pay. This can affect your payroll structure and have a significant impact on your budget.

Inclusion of Nondiscretionary Bonuses and Incentive Payments

According to the Department of Labor, this will be the first time in history that employers will be able to use non-discretionary bonuses and incentive payments to satisfy up to 10 percent of the standard salary. These payments must be made on a quarterly basis. For example, if you offer any type of bonus for meeting production quotas in any given month, you will be able to include these as part of the salary requirement.

Reclassification of Employees

Now may be a good time to update positions and make changes to certain positions so you can reclassify employees as non-exempt or subject to overtime pay. If you are planning to expand your manufacturing or industrial plant in the near future, hiring more workers, or downsizing the company, it makes sense to reclassify employees so you can afford to pay eligible employees overtime pay.

Improving Time Tracking

Whether you use electronic time cards or have employees fill out a time card in person before they leave the building, make sure you have an efficient time tracking system in place so there is no room for error — and complaints of not receiving overtime pay. Employees who are granted an hour for lunch, for example, but then end up working through lunch to finish a project on time, would need to log that extra work time. If this happens consistently, you will be required to pay them overtime when they go over their standard work hours. Make sure to implement an accurate time tracking system so you can keep up with the FLSA’s overtime rule changes.

If you need help with payroll services or have questions about the upcoming wage and overtime changes, talk to the experts at Bear Staffing. They can answer all of your payroll questions and provide guidance on handling FLSA rules and regulations.

Key Takeaways:
  • All employers must comply with the new rules by December 1, 2016
  • Workers who earn as much as $47,476 a year will have to be paid overtime
  • Improving time tracking activities can help better manage overtime pay changes
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