Current status of U.S. overtime legislation
Overtime was headline news throughout 2016. The once-proposed changes to the overtime salary threshold under the Obama administration quickly devolved into the stalling of its implementation, parties on either side trying to push for a favorable decision, and businesses of all sorts scrambling to undo the various measures they’d undertaken in anticipation of the seemingly now-defunct changes. Since then, there’s been quite a bit of change and uncertainty surrounding overtime legislation. Read on to see exactly where we’re at now:
Status of Obama-era overtime increase
This once-finalized legislation (which would have increased the nonexempt overtime salary threshold from the current $23,660 annual to $47,476 annual) was scheduled to go into effect in December of 2016, but then stalled by a preliminary injunction from a U.S. District Court in Eastern Texas.
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Since then, the U.S. Department of Labor (DOL) has decided not to challenge this injunction, effectively abandoning the change altogether. On June 30, the DOL announced that it will instead attempt to draft new legislation that will lower the nonexempt salary level.
Additional proposed overtime changes
The latest bill — the Working Families Flexibility Act — proposes to tweak the FLSA’s stipulation that employers must pay employees overtime (at 1.5 times the regular rate for time worked over 40 hours each week). If the bill passes, then employers would have the option to offer non-exempt employees compensatory time off (banked at the rate of 1.5 times the number of overtime hours worked, up to 160 hours) in lieu of overtime pay. The bill — already passed in the House — is currently being considered by the Senate, with revisions anticipated. If it passes, it likely would not go into effect until sometime in 2018.
What this means for businesses
Although the legislation surrounding overtime compliance remains largely in flux, it’s never a bad time to audit your workforce and ensure that both your exempt and nonexempt workers are rightfully classified as such. Take the necessary steps to ensure that your business is prepared to quickly respond to pending overtime changes, regardless of their ultimate outcome.