New OT rules coming this spring — will you be ready?

Looks like 2022 will be the year of new overtime rules … again!

At the very end of the year the Department of Labor (DOL) made its intention clear to update the salary level requirement of the section 13(a)(1) exemption for executive, administrative, professional, outside sales and computer employees.

The feds last overhauled the overtime rules in January 2020 to:

• $35,568 a year, or $684 per week, for the standard salary level, and
• $107,432 per year to qualify as overtime exempt as a “highly compensated employee.”

But those most recent rules also set up for a “regular” review and updating of these thresholds.

And the DOL is making good on that promise … at the expense of your company’s budgets. Fortunately there are some steps you can take now to prepare.

Coming in April 2022

You’ll have little time to get in compliance – the rules are expected this April. That’s when we’ll have an idea of just how many more employees will be overtime eligible.

Of course your 2022 compensation budgets are set by now. And without an idea of just how high the new number will go, you might feel like there isn’t much that can be done.

But this is when a little scenario planning can go a long way. And you’ll want to do it on two fronts:

• tactically with Payroll. Have your team run some reports to see just how many folks would now move into overtime territory if the feds raised the threshold by $10,000, $20,000, even $30,000. That will give you a jumping-off point to see what this latest revision stands to cost you.
• strategically with the executive team. Armed with the data Payroll gathers you want to pose the big questions: How large would the increase have to be to make us boost salaries to put people outside the new OT threshold? Should we audit current job descriptions to shield us from liability?

Having these answers even before the DOL releases the new numbers can position you to act quickly once you have them in hand.

It can also help your finance team prepare for the inevitable onslaught of questions employees will have once they hear the rules are changing again.