Overtime exemptions are on hold. How will it affect you?

working overtime - PayReel

Overtime exemptions are on hold. How will it affect you?

Overtime exemptions are on hold. How will it affect you? 1756 1241 PayReel


A ruling slated to put an additional $1.2 billion per year in workers’ pockets is now on ice. Here is the state of the Fair Labor Standards Act (FSLA) and what it means for your business.


What exactly is the FSLA?

The Department of Labor’s (DOL) FSLA includes new overtime exemptions. If and when it goes into effect, the law will nearly double the salary threshold (from $455/week to $913), thereby making up to 4.2 million more people non-exempt and eligible to be paid overtime.

On November 22, 2016, a week before the ruling was to take effect, a judge in Texas won a preliminary injunction against it. While the twenty other states that fought to end the act breathed a sigh of relief, the DOL cried foul and filed an appeal.

As of this posting, the battle continues.


What do stalled overtime exemptions mean for businesses?

Like all things involving government and money, it’s complicated. And it’s likely to cause headaches for anyone digging in to the nitty-gritty details.

With the issue in limbo at a federal level, states are trying to figure this thing out on their own—which makes room for a lot of gray areas. Gray areas are where lawsuits live. There are different labor laws at the federal and state levels. In most legal situations, federal trumps state. It’s different from labor laws, though, because states are only required to use federal guidelines as a baseline.

Another place with plenty of room for confusion is worker classification, which we cover in an ongoing blog series here. Often, workers fall into both exempt and non-exempt classification categories, which affects eligibility for a slew of benefits, including overtime. In these cases, classification depends on a weighted scale of the employees’ duties. It’s shockingly easy to misclassify workers and rack up legal fees and fines before you know it. Classifying workers correctly the first time around puts employers in a better position to adjust to changing laws in the future.

PayReel’s policy pros—in conjunction with our custom PayReel OnLine software—protect your sanity and your finances by sifting through the legal complexities and taking responsibility for your workers. As the employer of record for our clients, we are the ones on the hook if we get it wrong. The good news is, that rarely happens.

With PayReel, you can hire who you want, when you want, without worrying about overtime exemptions and worker classification. As the ones who are legally liable for our employees, and morally liable to our clients, we’re dedicated to understanding the ins and outs of both so we can make the right decisions.


What’s the bottom line?

The end of the year is a great time to review your payroll practices to be sure you are compliant or are in a position to stay compliant as laws change. If you don’t have the time, resources, or expertise to make sure you’re not trapped in a legal gray zone, get in touch with a team that does. PayReel’s policy pros are available around the clock at 303-526-4900, or you can shoot us an email by clicking here.


Nat's notes

About the author

PayReel Customer Experience Manager Natalie “The Go Getter” McGinnis recapped 2016’s biggest news in freelancer management to help you prepare for 2017. Nat’s experience in recruitment and customer service set her up for success in providing laser-focused attention and assistance to the PayReel employees and clients who need it the most. Click here to read more of Nat’s Notes and meet the rest of the PayReel team by clicking here!