July 12, 2016
In May 2016, new overtime laws for salaried employees were announced, and they will go into effect December 1, 2016.
Follow this guide to make sure you are in compliance:
1. Make a list of your employees who are salaried and earning less that $47,476 per year.
Keep a record of hours worked per week for each of the employees.
Define a "workweek" by a seven day period and use that period consistently through the year.
Overtime is always calculated by the excess of 40 hours in a week.
2. If any employee described above works more than 40 hours in one workweek, calculate the
"regular" hourly rate by: annual salary/52 weeks/40 hours
Each hour over the 40 per week, is to be paid an overtime rate.
hourly rate x 1.5 = overtime rate per hour
Remember that a salaried employee is subject to the minimum wage laws.
If a worker's pay increases substantially with the new rules, you have some options:
1. If an employee's pay is likely to be more than $47,476 per year after applying the overtime rules,
give the employee a raise to $47,476 or more per year and avoid the bother of the calculations.
In order to avoid the overtime rule by paying $47,476 or more, the worker must be highly
skilled or do professional work, with the majority of their time as non-manual work.
Other workers who are exempt include most farm laborers, outside salespeople, and certain
2. Do not authorize overtime work for salaried employees who earn less than $47,476. However,
wage and hour laws require that you pay the employee for the unauthorized overtime.
The key is to not permit the overtime, if you do not want to pay the worker for it.
This is only a brief summary of the complex rules now in place. The following websites
provide more details where you can research your particular situation
Please contact our office at 541.388.7888 if you have questions regarding this issue.
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