What Employers Should Know About Overtime Rules

Overtime regulations

are essential for fair employee compensation beyond the standard 40-hour workweek. Employers must grasp these rules to prevent misclassification, legal issues, and penalties.

Basics of Overtime Rules:

• Under the Fair Labor Standards Act (FLSA), non-exempt employees receive overtime pay at 1.5 times their regular hourly wage for hours over 40 in a workweek. Some states have stricter rules, like daily overtime for over eight hours worked in a day.
• Employers must maintain accurate work-hour records and classify employees correctly. Misclassification can lead to back pay claims and litigation.

Exempt Employees:

A comprehensive pay equity audit is a crucial first step. Employers should analyze their compensation data to identify and address disparities. Key considerations include:

1. Executive Exemption:
• Manages the business or a recognized department.
• Supervises at least two full-time employees.
• Earns at least $684/week or $35,568 annually.
2. Administrative Exemption:
• Performs non-manual work related to business operations.
• Exercises discretion and judgment on significant matters.
• Earns at least $684/week.
3. Professional Exemption:
• Requires advanced knowledge in a specialized field.
• Creative professionals also qualify.
• Earns at least $684/week.
4. Outside Sales Exemption:
• Primary duty is making sales or securing contracts outside the regular workplace.
• No salary threshold.
5. Computer Employee Exemption:
• Includes systems analysts, programmers, and software engineers.
• Earns at least $684/week salaried or $27.63/hour hourly.

Key Employer Considerations:

1. Increasing Salary Thresholds: Federal thresholds are rising. Stay informed.
2. State-Specific Laws: States like California have stricter salary thresholds.
3. Misclassification Risks: Ensure job titles match actual duties and salary thresholds.
4. Tracking Non-Exempt Employees: Accurate timekeeping is crucial, especially for remote workers.
5. Regular Audits: Periodically review pay practices and classifications for compliance.

Staying Compliant:

• Conduct regular pay audits and adjust salaries as needed.
• Train managers and HR teams on overtime rules.
• Monitor legal developments to adapt to new regulations.

Employers who proactively address overtime compliance avoid legal risks and build employee trust through fair practices.

Conclusion

Understanding and complying with overtime rules safeguard employee rights and promote equitable pay. Accurate tracking, regular audits, and staying updated on changes help mitigate risks and foster a productive workplace.

In this issue:

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What Employers Should Know About Overtime Rules

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