As you may know, the US Department of Labor released its much-anticipated new overtime rules last week, making an estimated 4.2 million more workers eligible for overtime pay. For accountants, the new overtime rules won’t only impact how they operate internally, but as trusted advisors to business owners, you’re likely to receive questions from clients about how to best navigate these regulations.
The new changes double the salary threshold for “white collar” exemptions from $23,660 a year to $47,476. The updated rules also increase the minimum salary of highly compensated employees from $100,000 to $134,004 per year and establish a mechanism for automatically updating the salary and compensation levels for exempt employees every three years.
These changes will impact just about every employer in the United States. The occupations most impacted include employees in office and administrative support (46 percent), transportation and material moving (40 percent), and farming, fishing, and forestry (40 percent).
The AICPA reports the rules will also have a significant impact on accounting firms (specifically, smaller firms and junior-level employees in lower-wage areas around the country). Yet, recent ADP research suggests that only 25 percent of small business owners and 50 percent of midsized employers are aware of and taking action to comply with the new overtime regulations.
It’s important for your business clients to make sure they are properly classifying and paying employees, and tracking time accurately to ensure they are compliant when the deadline hits on Dec. 1, 2016. By following and sharing the steps below, accountants will be on the right track to comply.