In May, the Department of Labor announced a new rule that would have made overtime available to salaried employees making less than $47,476 – more than double the previous bar of $23,660.
The decree set the business world afire. The more than 4 million workers who stood to benefit from the switch were enthused, while business groups were concerned how the change would impact employees’ careers and the bottom line.
The deadline for the new DOL overtime rule was set for Dec. 1, 2016, sending employers into a tailspin as they hastily restructured to achieve compliance. Their options?
- Allowing employees a maximum of 40 hours per week.
- Raising employees’ salaries beyond the pay threshold.
- Reclassifying salaried employees to hourly.
- Paying additional time-and-a-half costs for newly-covered employees.
Twenty-one states sued, stating that the DOL overstepped its bounds, and just days before the Dec. 1 deadline, the courts approved a nationwide injunction. The Department of Labor followed suit, and filed an appeal on Dec. 1.
With a potentially lengthy appeals process at hand, the new DOL overtime rules were thrust into limbo, leaving one question hanging in the balance: What should business owners do in the interim?
As an Employer of Record handling all payroll, insurance, tax, and compliance matters for media and entertainment agencies, Maslow Media Group recommends the following:
- Make sure all employees are properly classified. Often, many employees may be categorized for exemption – as administrative, professional, or even executives – without actually performing those duties, which opens up various doors to litigation. Make sure to review those workers who are classified as independent contractors, or who perform services in a manner other than as an employee. Now is the time to review for compliance, and to reclassify as W-2 employees if necessary.
- Proceed with caution. For those employers who have already initiated changes in anticipation of the new rule, remember – rescinding a pay raise, although within an employer’s rights, could do more harm than good, particularly regarding morale.
- Continue to track and record hours properly. If you have not initiated changes, it is advised to put all plans on hold until a ruling is delivered. No matter the outcome, keeping all of your ducks in a row is a solid rule of thumb. Extensive record-keeping is the key. Employers should take this time to consider switching to an automated system, or outsourcing their payroll.
For now, perhaps the best course of action is to take a wait and see approach. Keep checking our website for updates, as Maslow Media Group has been closely following development of the new DOL overtime rules. Since 1988, we have served as the premier resource regarding media and production industry compliance issues. Contact us today to learn more.