Employee overtime rules in the U.S. will change, the question is when? The Society for Human Resource Management reported the Department of Labor pushed back its original expectation for when updated overtime regulations would go into effect. Current estimates suggest this drastic change to payroll operations won't become law until late 2016, and even then, it may be a slow adoption process.
Here is what is currently known about the DOL's schedule for OT rules and how small businesses can prepare for the legislation:
The late 2016 start date
The DOL wants to raise the minimum salary threshold for overtime pay from $23,660 to $50,440. This would be a drastic increase and industry experts predict the final number will probably be something closer to $40,000.
The ongoing debates about terms is one of the reasons OT regulations keep getting pushed back. If current projections hold, rules will go into effect in late 2016 – July is a front runner. The DOL may push the deadline late enough, however, that businesses won't have to comply until 2017. At this point, companies may want to create projections for all possible outcomes but should favor a start date before the 2016 election.
The 2016 presidential election
Should a Republican nominee win the 2016 presidential race, it's quite possible the party will alter or outright kill the proposed changes to the overtime rules. For this reason, the DOL is motivated to pass the regulations before the election results.
If a Democrat wins, however, it's more than likely that he or she will be in complete favor of the changes. Small businesses should follow the election to anticipate schedule shifts. Depending who's in the lead, OT alterations could come much faster or slower than expected.
A phased-in approach
Using the current approach, businesses have 60 days to comply with OT rule changes. The election and the example of cities that passed similar regulations may create a different schedule for compliance, however.
It's possible the DOL will introduce regulations through a phased-in approach. The rules may pass incrementally, with the first part going into effect before the election, making it harder for a conservative president to stop it. This option is much more likely if the DOL regulations try to change a number of things like introducing automatic increases to the threshold and duties test to qualify applicants.
However and whenever the DOL passes the new OT rules, small businesses needs flexible HR software to respond to alterations.