The U.S. Department of Labor (DOL) is on track to finalize a new overtime rule in April 2024, with a swift implementation timeline of just 60 days after that. This accelerated process deviates from past practices, where employers had up to 192 days to comply. The DOL’s rationale for this expedited timeline stems from economic shifts necessitating an update to the salary level standard. Should the DOL adhere to its April deadline, the new rule could be enacted by June 2024. While the DOL has faced challenges meeting deadlines, employers are advised to prepare for timely implementation this time.
The impending overtime rule will elevate the minimum annual salary for most exempt employees paid on a salary basis from $35,568 to an estimated range of $55,068-$60,209 per year. Approximately 3.4 million exempt employees earning below this threshold will require adjustments in salaries or classification as nonexempt employees.
Considering these anticipated changes, consider the following proactive steps:
Identify Impacted Employees
Determine which employees are exempt from federal overtime regulations and fall below the proposed new salary threshold.
Consider Base Pay Adjustments
Evaluate whether transitioning affected employees to nonexempt status or raising their salaries above the new threshold is the best action.
Implement Time Tracking and Training
Initiate work hours tracking for potentially nonexempt employees to accurately anticipate overtime payments.
Review Telework and Flex-time Policies
Assess existing policies related to remote work and non-standard hours to ensure precise compensation and overtime tracking.
Evaluate Compensation Methods
Consider paying newly nonexempt employees hourly to streamline tracking working hours and ensure compliance with FLSA regulations.
Calculate Potential Costs and Budget Impact
Conduct a thorough analysis of the financial implications of adjusting salary levels and overtime payments on yearly budgets, making necessary updates.
For inquiries or clarification regarding the proposed overtime rule changes, reach out to your dedicated advisor at Yeo & Yeo. The specialists in our Payroll Solutions Group and HR Advisory Solutions Group are ready to provide further assistance.