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"Ask Your Attorney" Column

About The New Federal Overtime Pay Rules

Dear Counselor: I run a business and have quite a few salaried employees. I heard that President Obama and his Dept. of Labor have adopted rules that will greatly increase the number of salaried workers who qualify for time and a half pay, and will no longer be exempted. This could really affect my business. Are there really new rules?

Dear Client: You heard right. The Obama Administration has now published final rules that will go into effect December 1, 2016. Employers (including you) will have to "huddle" with their attorneys to discuss how the changes will affect them. Currently, salaried workers who are paid at least $23,660 per year, and who perform executive, administrative, or professional services, are exempted from the "time and a half" rule for working hours in excess of 40 in a work week. But under the new rules, the threshold goes up to $47,476, and it is projected that over 4 million employees will now be qualified to receive overtime pay (even if they are salaried). So, for example, if you pay your assistant managers a salary of $38,000 per year, and for that they routinely work a 45 or 50 hour week, then you will have to begin to make them keep track of their hours, and pay them time and a half for hours in excess of 40 -- even if they agreed to those terms in their contract, and even if they might get a performance bonus. Critics say the policy unduly interferes with a person's ability to determine their own work goals and choices, and that the result will not work to the favor of employees. Instead of benefitting the employees, the critics say it will reduce flexibility in hours, lead to demotions, and add more regulatory burdens to small businesses who are already ill-equipped to handle the added costs. Speaker Paul Ryan calls it a "disaster for our economy" and has announced that he and other lawmakers will make an effort to block the rule. But whether he will be successful or not is unknown. Therefore, you need to become knowledgeable of how the exact terms of the law affect your business, and make plans to deal with it.

Sincerely,

John L. Maier, Jr.

jmaier@wisclaw.com

Sweet & Maier, S.C., Attorneys

114 Church St. Elkhorn, Wisconsin

262-723-5480 www.wisclaw.com

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Elkhorn, WI 53121

Phone: 262-723-5480
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