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Aug 11, 2016 |
Employers,  |
Mitchell Riley

Do You Qualify For Overtime Or Are You Breaking The Law As An Employer?


Some people may or may not be aware that there is a minimum threshold for a salary employee that may or may not qualify for overtime. In 2004 the Wage and Labor Board implemented a law that stated any employee that is on salary and works overtime must make a minimum of $455 a week, which is roughly 23,000.00 a year. $455.00 per week at 40 hours equals 11.53/hr.

With the new Wage and Labor boards law they are pushing this threshold to $913 per week or $47,476 per year. You are allowed to calculate in 10% of an individuals bonuses, commissions etc. to this figure. Now lets use an industry that we specialize in as an example, the restoration industry, and why we believe every employee and employer needs to be knowledgeable on this new law. It is very common for Production Manager's or Project Manager's to be put on a 40,000.00 salary plus commissions or bonuses. Unless that person is able to get 80,000.00 in additional commissions their wage will now be considered illegal. Many of our clients are switching these particular folks to an hourly rate rather than salary. Now employee's don't freak out, hourly in most cases will earn you more money than you are currently grossing. Conservatively speaking lets say a Production Manager is on a salary of 40,000.00 and they aren't making bonuses or commission, I know this is a low figure but it keeps the math simple, if you were to work 45 hours a week your hourly wage is (40,000.00/52 weeks= 769.23/45= 17.09/hr) 40,000.00 per year at 40 hours a week will equal 19.23/hr. With this being said unless your employee's don't work overtime, which we all know most employees do, you need to push there salaries to 47,000.00 to be safe, reduce their hours, or pay them overtime on the additional hours they work, which is 1.5 X their hourly rate. The same goes for any position within most industries, however, there are a few exceptions. 


According to the Wage and Labor board they are granting exceptions for certain professions, which personally I don't completely agree with but I'm no expert in this topic just an informed professional. From my personal interpretation they are excluding Administrative professionals, teachers, and outside sales professionals. You will need to read all the qualifications for the exemptions yourself to attempt to decipher who will qualify. See the link at the bottom of this Blog to the United States Department of Labor's website.

There is one more group of employees that qualify, however not many restoration professionals fit this category. The 90th percentile or anyone who is on a salary over $100,000.00 also qualifies and their threshold will increase to 134,000.00. We hope that everyone finds this summary informative, and will study the new Final Rule themselves to ensure everyone is abiding by this new wage law.

Here is the link to the United States Department of Labor and all the direct information for the new Final Rule going into effect December 1, 2016. https://www.dol.gov/whd/overtime/final2016/

Blog Posted: Aug 11, 2016
Posted by: Mitchell Riley
OPS Staffing
(888) 482-6019

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