Overtime pay rules for salary employees are changing. Effective December 1, 2016, salary employees making less than $47,467 per year or $913 per week will be eligible for overtime pay.  Those salary workers making less than the annual or weekly salary limit must be paid time and a half for any hours worked above a 40-hour work week.  While the change does not affect the “duties test” which establishes criteria for over-time eligibility, raising the salary threshold makes the application of that rule immaterial for those people earning less than $47,467 annually.  There are two examples in my work experience where this change would have had an impact.

The first example of unpaid salary overtime I witnessed was when I was retail associating in college.  I began and ended my retail career as an entry-level sales associate making minimum wage-ish.  The store assistant managers were salary employees that provided management coverage during the hours the store was open.  During lulls in the retail seasonal calendar, those assistant managers made decent but not great money.  During busy holiday periods, the assistant managers’ pay dropped down to my level on a per hour basis (weekly salary divided by hours worked).  A review of retail manager trainee salaries on Glassdoor.com estimates those salaries in the retail industry to be below the $47,467 threshold, making those employees eligible for overtime pay beginning Dec. 1.  This may also be applicable to salary workers in other industries like food service, hospitality, etc.

A second example this overtime eligibility change brings to mind is caregivers.  When my children were younger I used childcare services at varying times at both a caregiver’s home and had a caregiver come to my home.  Having an in-home caregiver is where the red flag resides.  I paid my in-home employee on a per day basis.  If I came home early – good for her.  If I occasionally worked late – sorry.  I didn’t want to count hours to make it easier on both of us and slanted the hours in the caregiver’s favor on a weekly basis.  This overtime rule changes how the caregiver contract should be administered.  It’s easy to envision an issue, especially with a live-in type nanny, where there may not be a clear distinction between work hours and time off.  Over-night care may be especially problematic because on the one hand the parent may feel the employee is getting paid to sleep – on the other hand, an adult has to be present and a service is being provided.  Either side can be ripe for abuse and both need to protect themselves.  TheMoneySkinny recommends keeping a log of hours worked for in-home care to protect both the employer and employee.  The best tool to do that is a timesheet signed by both parties.  Childcare services are in an unusual area where price is not indicative of quality and results may be difficult to measure.  What can be measured is hours worked, giving structure to the caregiver contract.
 

The overtime pay eligibility requirement is for all salary employees earning less than $47,467 annually, regardless of the type of job performed.  Employers have until December 1, 2016, to meet the requirements, whether that means changing salary pay to hourly pay, adjusting hours worked or compensation amounts or another solution.  Employers and employees need to begin discussions about the anticipated impact of this overtime rule change.  More details are available at www.dol.gov/featured/overtime.

• Effective December 1, 2016, salary employees making less than $47,467 per year or $913 per week will be eligible for overtime pay. Those salary workers making less than the annual or weekly salary limit must be paid time and a half for any hours worked above a 40-hour work week.
• Employers and employees need to begin discussions about the anticipated impact of this overtime rule change.