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What do the new overtime rules mean for your business?

In March 2014, President Obama issued a Presidential Memorandum directing the U.S. Department of Labor (DOL) to “modernize” and “streamline” the Fair Labor Standards Act’s (FLSA) overtime regulations. After several delays, the DOL finally published its proposed changes in early July.

While many anticipated the proposal would encompass broad changes to the overtime regulations, it focuses on the minimum salary level that must be paid to an employee for the employee to be exempt from the FLSA overtime requirements. The current threshold is $455/week or $23,660/year. Under the proposed changes from the DOL, the salary threshold for the new overtime rules will increase to approximately $970/week or $50,440/year.

Since these new overtime rules have the potential to generate a significant increase in labor costs and reclassification of employees from exempt to non-exempt, employers should consider planning for these changes to the new overtime rules which will likely go into effect sometime in 2016.

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