The Department of Labor recently updated the Fair Labor Standards Act (FLSA). The regulations regarding overtime pay for white collar workers was last updated in 2004. The new changes were proposed to take effect December 1, 2016 but implementation has been delayed. It is most likely that this will affect you. Our Adam Shay accountant in Wilmington NC explains the ins and outs of the regulations so you may better familiarize yourself with the changes.
FLSA requires that certain employees that do not fall under an exemption be paid overtime if they work over 40 hours a week. These employees would include inside sales, construction workers and waitresses to name a few. So, the change here is that any employees you have paid up until December 1, 2016 as salary that don’t fall into an exemption (to be discussed below) will have to track their time on an hourly basis and be paid overtime as applicable.
There are certain professions exempt from the overtime pay rules:
-Learned professionals (such as CPAs).
-Creative professionals (such as musicians or writers).
-Law or medicine (you must hold a valid license or certificate).
-Teachers (definitely exempt if teacher holds a certificate, anyone who does not may still be subject to overtime rules).
-Highly compensated employees.
-Administrative employees (certain duties must be met to qualify).
If an employee falls in the exempt category, they are exempt from tracking time and overtime pay, if the employee is paid a certain salary level. Previously, the salary level was set at $23,660. With the new regulations, the salary level increases to $47,476. If the employee is considered exempt, but is paid under $47,476, then you must track their time to monitor and pay overtime. If you have an exempt employee that you are currently paying $45,000, it may save you time, money and headache to go ahead and bump them above the $47,476.
Another notable change with the new regulations is that beginning on January 1, 2020 the salary level will be updated every 3 years.
Contact an Expert Accountant in Wilmington NC
We encourage you to be proactive and start evaluating any changes you need to make now. If you’re looking for an accountant in Wilmington NC please feel free to reach out to our office if you have any questions.