Payroll, Overtime

Navigating the Updated Overtime Rules: A Compliance Guide for Employers

January 24, 2024

Even if you are already familiar with overtime rule compliance, it's important to note that the updated overtime regulations are bringing changes for employers like you. The U.S. Department of Labor (DOL) recently announced that it plans to release its anticipated final rule amending the regulations that define the “white collar” exemptions from the overtime and minimum wage requirements of the Fair Labor Standards Act (FLSA) in April 2024. This information highlights the significance of complying with overtime rules. Here’s what you need to know;

The DOL has Updated Its Overtime Rules

The DOL has proposed a new rule that aims to provide overtime protection to around 3.6 million workers who are not currently entitled to it. The proposed rule seeks to increase the white-collar salary exemptions, which would enable more employees to receive overtime pay instead of being excluded because they are on salary.

Currently, many workers are required to work more than 40 hours per week, but their pay remains constant irrespective of the amount of work they do. The new proposed rule would change this for a considerable number of employees. The exemption salary threshold would increase to a little over $55,000 annually, making salaried workers earning less than that figure eligible for overtime pay. 

This proposed rule would require many businesses to update and comply with overtime regulations, ensuring that their workers receive fair payment for their labor.

Minimum Wage and Fair Scheduling Get an Overhaul

Along with the recent proposed changes to overtime rules, there have been adjustments in minimum wage laws and fair scheduling ordinances too. It's important for companies to consider the minimum wage increases that are being introduced in 2024 when examining overtime compliance and the updated overtime regulations. 

In addition, fair scheduling, sometimes known as predictive scheduling, can affect the number of hours an employee can work, including their breaks, lunch hours, and minimum times in between shifts. States can make their own rules in these areas, as long as they provide better employee protections and benefits than the federal minimums. If states don't have their own rules, the federal rules apply. Therefore, it's crucial for companies to be aware of the rules in every state that has their employees, in order to ensure compliance.

Reviewing and Reclassifying Employees

Two big areas to consider with the overtime rule changes are payroll adjustments, and employee classification reviews to ensure compliance. 

Payroll adjustments need to be made for employees who were previously ineligible for overtime. Otherwise, their schedules will have to be modified to minimize or eliminate overtime. This could be advantageous for employees who wish to work fewer hours, as well as those who want to work more hours and earn supplementary pay.

Minimize the Risks of Legal Repercussions

Minimizing non-compliance risks and potential legal repercussions is a significant part of navigating the updated overtime rules, along with any reclassification or other changes. Payroll adjustments for overtime may not be built into the system you're currently using. Additionally, it's important to take a look at every employee in the system to ensure a reclassification or other adjustment isn't overlooked.

Before opening any new location for your company, or taking on remote employees in another state, you'll want to take a careful look at the applicable laws in that area. Then you can have assurance that you're protecting yourself and paying your employees adequately (and legally), so you don't make compliance mistakes that can come with fines.

A Comprehensive Guide to Time and Attendance

The Right Guidance Makes the Difference

Need help navigating the new overtime regulations? Simply contact Payday Payroll for our expert guidance and support to ensure your business is fully compliant. Once you have confidence in your compliance levels, you can focus your energy and effort on helping your business grow and succeed.


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