New Minimum Wage and Overtime Regulations

Minimum wage is going up significantly for exempt employees (from about $23k/year to $47k/year). If you are a small business owner, this may mean that you need to start paying overtime to employees who previously didn’t qualify for it.  

According to the Fair Labor Standards Act (FLSA), certain employees (executive, administrative and professional employees) are exempt from overtime pay as long as they meet a certain wage threshold. A new rule will go into effect December 1, 2016 that requires exempt employees be paid at least $913/week ($47,476/year) in order to remain exempt. Employees making less than that will be non-exempt (entitled to overtime pay). 

 Image from https://www.dol.gov/
The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.
— US Department of Labor, The Final Rule

Visit DOL.gov to read more about this new regulation.

Need help preparing your bookkeeping system for the change? Email David@DEKEbookkeeping to set up a consultation.