Quick Facts on New Federal Labor Law – Effective December 1st 2016

***Update 11/23/2016

The Chamber of Commerce and 21 states filed an injunction that was upheld by a federal judge in Texas, effectively  halting the new overtime law that was set to go into effect December 1st, 2016. The ruling delays the law and prevents it from going into effect until the court has made a final ruling. We will provide more details as they are forth coming.

What Is the Final Rule?

If you haven’t heard, the Department of Labor recently published a Final Rule that updates the regulations of the Fair Labor Standards Act (FLSA). We’ll leave the political/economical discussion to the professionals (there’s a lot of buzz out there on this topic) but it suffices to say that the impact will be significant—especially on small to medium sized businesses.

According to the Department of Labor there are 4.2 million workers who will now be protected by the new rule.

To help you prepare for the changes to the FLSA, here is a video and a quick summary below of what’s new. Let’s take a look.

Video Published May 17th, 2016 by the U.S. Dept of Labor. “Secretary Tom Perez explains the new overtime rule and how it helps ensure for workers a fair day’s pay for hard day’s work.”

Final Overtime Rule Key Points Summary

  • New Salaried Employee Overtime threshold is $47,476
  • Every 3 years this will be adjusted for inflation (possible new threshold of $51,000 by 2020)
  • Nondiscretionary bonuses and incentive payments are able to be used to satisfy up to 10% of the standard salary test requirement. This includes commissions.

How It Affects Your Office

The new threshold slightly more than doubles the current threshold for salaried employees, which is at $23,660. Now when a salary is below $47,476 (or $913 a week) that employee’s time needs to be tracked and overtime wages accounted for.

The Final Rule on overtime means you have some decisions to make but it doesn’t mean anything is required beyond following their new overtime pay guidelines. On the Department of Labor’s blog it is stated that as an employer you can respond in a few different ways.

Employers Can:

  1. Pay time-and-a-half for overtime work.
  2. Raise worker’s salaries above the new threshold.
  3. Limit workers’ hours to 40 per week.
  4. Some combination of the above.

In other words, you have some options. And if paying employee overtime isn’t possible then there are other ways of structuring your office to accommodate the new rule.

How can TimeClick help?

There are recordkeeping requirements mandated by the FLSA that require a record of employee time cards. It is made clear that the method and form you choose is completely up to you (i.e. paper, Excel, time clock software, etc.). It just needs to be accurate, accessible, and maintained for a minimum of two years.

Our software, TimeClick, can handle these things and more. If you are in need of an automated time tracking software then check out TimeClick.

Benefits and Rationale for the New Rule

It has been more than 10 years since the rules were updated and the Obama administration is aiming to help employees that fall into that middle-wage category. Although it may be difficult for business owners to accommodate the new rule, the intent is to enforce time worked as time paid.

Department of Labor Resources for Further Reading


Kevin V.


Author Bio: A TimeClick tech support and sales guy since Jan 2015. Aside from writing the occasional article on time clock software or office networks Kevin loves reading in all forms and cycling to work.

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