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Deciphering New Overtime Rules | Complete Payroll

Written by admin | Jan 3, 2015 10:00:24 AM

 

The federal government changes its rules regarding overtime regularly—and those rules seem to grow more complicated every year. Who is entitled to overtime pay? Who is exempt from it under federal wage and hour laws? Here's how you can make sure you're applying federal overtime rules the right way:

Do I Have to Pay Overtime to Salaried Employees?

Say all of your employees are paid salaries, based on a 40-hour work week. Do you have to pay them overtime when they go over 40 hours? That depends on their salary itself. Salaried employees who earn $455 weekly or more—which comes out to $23,660 or more annually—and perform executive, administrative or professional duties as defined by the federal government are exempt from overtime pay. Salaried office employees who earn less and those who do not primarily perform executive, administrative or professional duties are not exempt.

What If Some of Our Employees Perform Both Exempt and Non-Exempt Duties?

You know that employees who are executives, administrators or a certain type of professionals are exempt from overtime, but sometimes they do work that really isn't typical of a manager, executive, administrator or professional. But the federal rules state that you base exemption on an employee's primary duties.

What About Our Outside Sales Personnel?

If your sales people spend most of their time calling on customer accounts outside of your office, you can continue to pay them a base salary, plus commission, if their primary duties are making sales, or obtaining orders or contracts, and if they customarily and regularly do this work away from your place of business. The minimum salary requirement for an exempt employee doesn't apply here.

What About Making Deductions from Exempt Salaries?

You don’t want to run the risk of your employees losing exempt status because you've made deductions from their salary—for example, for disciplinary reasons. (You could get into serious trouble yourself for this). An exempt employee is entitled to full salary for any week that work is performed, regardless of the number of hours. You can suspend an exempt employee without pay for serious conduct violations or discipline with partial-week suspensions, without pay, for misconduct.

If you make unauthorized deductions from an exempt employee's salary, you'll risk losing not just the individual's status but also the status of the entire class of exempt employees at the company.

Any more questions about paying overtime, payroll rules or payroll in general? Call the team at Complete Payroll Processing—we'll have the answers you need, because we stay up-to-date on the latest laws and regulations.