With 10 days to go until new overtime regulations under the Fair Labor Standards Act kick in, employers across Maryland should be taking a hard look at how the law will affect their business, if they haven’t already.
The new regulations, which go into effect Dec. 1, set the salary threshold for non-exempt employees to $913 per week, or $47,476 annually, for a year-round, full-time worker. The compensation threshold for highly compensated employees is $134,000.
The rule also will automatically adjust salary and compensation levels every three years to keep them in line with salary levels. However, that provision may be overturned, said Harriet Cooperman, a partner at Saul Ewing specializing in employment law.
Cooperman spoke to about two dozen business owners at an event held by the Greater Baltimore Committee on Monday to walk through the intricacies of the changes to the FLSA and how it may affect how employers classify their workers. The new rule will extend the right to overtime pay to an additional 4 million workers nationwide.
Even with pending lawsuits, objections from Congress and speculation on what a Trump presidency will mean, employers still have to be in compliance with these overtime laws in two weeks.
“You have to act as if these regulations are going into effect,” said Cooperman.
The U.S. Department of Labor last updated the regulations in 2004, when exemptions began if an employee had a weekly salary of $455, or less than $24,000 annually.
Cooperman stressed that the weekly salary rate of $913 is the important thing for employers to remember. Exempt, salaried employees need to be paid at least that much weekly to be ineligible for overtime. Under Maryland’s wage laws, employees must be notified of pay adjustments within one pay period before any change.
Employees reclassified as non-exempt will have to start keeping track of their hours and there might be possible fluctuations in paychecks if the employee’s hours change from week to week.
It will take time for employers to take stock of their employees’ compensation and hours they work, Cooperman said. In cases with employees who might be subject to a lot of overtime pay if classified as nonexempt, it might make sense to raise their salaries to get them above the income threshold. In other cases it may make more sense to restrict employees’ schedules to 40 hours per week and have them track time spent on the job.
The Department of Labor has yet to give guidance on how checking email and answering phones during non-working hours will play into the new FLSA rules, Cooperman said.