The DOL's proposed overtime regulation hurt small businesses by expanding overtime pay eligibility from July 2024. Overtime compensation will be available to four million more workers, potentially changing their categorization from exempt to nonexempt. The federal salary threshold increase for exempt employees drove this adjustment.

This change requires small enterprises to examine employee classifications and payroll. To comply with new requirements, you may need to reclassify some personnel, revise their compensation, or change their hours. You must consider how these changes may affect your labor costs and budget. Compliance prevents legal concerns and boosts employee happiness. Consult a labor law or HR specialist to keep educated and prepared. So, what are the new overtime jobs pay threshold and regulations? Read on for the answer.

2024 Overtime Policy Changes

The federal Fair Labor Standards Act covers overtime, minimum wage, recordkeeping, and child labor. Employers must consult the FLSA to determine overtime jobs exemption. Firms must pay employees at least the FLSA minimum wage to avoid overtime. Moreover, the Labor Department enforces the Fair Labor Standards Act. Thus, the DOL sets the salary threshold.

On April 23, 2024, the DOL published new overtime laws that define and limit exemptions for computer, executive, administrative, professional, and outside sales employees. Started July 1, 2024, millions of salary-exempt threshold employees no longer are eligible for overtime pay due to the increased DOL wage level. The new overtime legislation raises the federal minimum wage from $35,568 ($684/week) to $43,888 ($844/week) annually.

Criteria For Exemption

The new overtime legislation raised the federal minimum pay to $43,888 from $35,568. The new law updates the definition of an exempt employee. This is one of three criteria workers must meet to be exempt from the Fair Labor Standards Act. Overtime compensation is not necessary unless employees meet all three conditions:

• If employees receive salaries.
• Started July 1, 2024, the Fair Labor Standards Act minimum pay is $43,888.
• Workers in professional, executive, and administrative roles have significant workloads.

The new overtime rule upped the annual compensation threshold for highly compensated employees from $107,432 to $132,964.

DOL's New Overtime Regulation Effects on Your Small Business

Nothing will change unless your employees are exempt. Your nonexempt employees will get their base wage and overtime jobs for hours worked outside of their workweek. However, employees with a salary-exempt threshold may require action. If you need to reclassify exempt employees, you must follow the DOL's new overtime regulation. To follow the rules, do the following:

Check Your Exempt Employees' Pay

Check all exempt worker records first. What is your exempt employee's annual salary? Those earning $43,888 or more are exempt from duties. If you previously exempted workers earning less than $43,888, you have three options:

• Increase wages
• Remunerate overtime workers
• Work fewer overtime hours.

One option is to pay workers more than the $43,888 new minimum federal salary threshold. Another is to consider nonexempt worker pay raises. This strategy can prevent wage breaches and cover corporate compensation shortfalls.

Remunerate Overtime Workers

Workers who lose overtime jobs exemption must start receiving it if their annual pay drops below $43,888. For clarification, overtime means working more than 40 hours in a week at a time and a half. To compute overtime, take an employee's regular compensation and double it by 1.5. Multiply that rate by the total for each hour worked above 40. Changing employees' salaries to an hourly rate may help compute overtime. Maintaining federal salary threshold payments allows you to calculate overtime for compensated staff.

Work Fewer Overtime Hours

Another option to deal with the DOL overtime rule 2024 is to limit newly nonexempt workers' extra hours. Be upfront with employees when decreasing or banning overtime. Without pay, employees cannot work overtime, and it's illegal to force employees to clock out yet stay working.

Communicating With Incoming Nonexempt Workers

Talk to new nonexempt employees. These are the key topics to discuss with employees to ease adjustment.

State That Changes Are Needed

Some workers may need to be made aware of the switch from salary-exempt threshold to nonexempt. When you announce the changes, tell your team that you must follow the new Fair Labor Standards Act compensation level.

Highlight Adjustment Benefits

Some workers may be upset about losing the exemption. Workers consider all overtime jobs exemption as a sign of professionalism or elite status. If you are no longer exempt from overtime pay, you may feel degraded. Explain to employees that their exempt or nonexempt status does not affect their value to the organization. You can request changes based on your overtime policy. Finally, notify workers of overtime eligibility.

Teach Nonexempt To Record their Time Appropriately

This may be their initial requirement. Make sure your personnel recognize how to use your timekeeping system. If your business lacks a timekeeping system, an online time and attendance solution can be useful.

Inform your employees that they must record their hours. Your employees must record business calls during lunch as FLSA hours in addition to their regular activities.

Define Flexibility Modifications

Exempt workers have more freedom at work than nonexempt personnel in most companies. Explain how nonexempt status has affected your employees' flexibility. Many salary-exempt threshold workers can schedule their jobs around their obligations. Employees who can now work extra must keep accurate time logs.

Career Changes

When an employee loses their overtime jobs exemption owing to the DOL's new regulation, business policy may change. You may need to rearrange employment to reduce overtime and control rising labor costs. This may involve transferring responsibilities or reducing staff hours.

These adjustments must be explicitly communicated to affected personnel. Inform them of any role or schedule changes and how these will affect their work hours and remuneration.

Clear communication helps manage expectations and sustain morale during the transition. Also, explain your overtime policies to employees. Make sure staff know how to request overtime and any limits. Transparent policies will help employees organize their schedules and understand time and compensation management.