New overtime rules may affect employee pay.
By Kathryn Tunacik Smith, Partner, Strong & Hanni
Employers may need to pay more to their salaried employees under new Department of Labor regulations that went into effect December 1, 2016. Employees who are paid a salary will have to be paid at least $913 per week or $47,476 per year. If an employee is paid less than that, then they must be paid by the hour and must be paid 1.5 times their hourly rate when they work over 40 hours in a workweek.
The new regulations do not apply to most drivers. They also do not apply to drivers’ helpers, loaders who are responsible for proper and safe loading, and mechanics working directly on motor vehicles that are to be used in transportation of passengers or property in interstate commerce.
The change does affect dispatchers, office personnel, those who unload vehicles, or those who load but are not responsible for the proper loading of the vehicle. Any of these employees who are paid a salary will be affected if their salary is less than $47,476 per year.
The new rules also apply to drivers of small commercial vehicles with a weight rating of 10,000 lbs or less, such as commercial delivery drivers, repair persons, or newspaper route drivers. The salary threshold will be adjusted by the Department of Labor every three years based on wage growth.
Employers need to look at every employee paid a salary less than $47,476 per year and decide whether to raise the employee’s pay to the required level or switch the employee to hourly pay. Company owners will need to decide whether they will cap employee hours at 40 per week, or allow them to work overtime.
For example, a dispatcher who is paid a salary of less than $47,476 annually will either have to be given a raise to $47,476 annually, or be switched to hourly pay and be paid overtime for any hours worked over 40 hours in a week.
Update: Just as this article was going to print, a federal judge issued a preliminary injunction blocking implementation of the new regulations set to take effect December 1, 2016. The Department of Labor will try to get the injunction overturned and will continue seek to have the new regulations implemented. With the current political climate in Congress and with the Trump administration set to take office in less than two months, the new overtime rule’s long-term future remains in limbo. Given the uncertainty surrounding the implementation of the new regulations, employers are in a difficult position regarding what to communicate to employees regarding any changes to their pay, particularly if any changes were already communicated to employees. Given the current uncertainty regarding the new regulations, Employers should carefully consider any changes to salary employee pay and may need to consult an attorney regarding how to proceed with any changes and on what timeline.
Questions about the new regulations should be answered by a qualified employment law attorney who can determine how a specific business or employee will be affected. Please feel free to contact Kathryn Tunacik Smith, Partner with STRONG & HANNI. 102 South 200 East, Suite 800, Salt Lake City, UT 84111 | (801) 532-7080 |(801) 596-1508 Fax |firstname.lastname@example.org | www.strongandhanni.com