This is how the new overtime rule will affect you and your firm
By now many of you have likely heard about the Department of Labor’s new overtime rules, which are set to go into effect this December. We’ve covered this topic in the past (here and here, for example), but given the amount of convoluted and complex materials out there (look no further than DOL’s own fact sheet), it’s no surprise that there’s still some confusion surrounding these changes.
To simplify things, we’ve put together a brief outline of what AIA members can expect come December. By no means is this a comprehensive planning document; architects and firms alike will still have to determine how exactly the overtime rule will impact them, and the effects are likely to vary based on firm size, location, and other factors. Nevertheless, this should clear up some of the misinformation that’s been circulating around recently.
How is overtime currently mandated?
The Fair Labor Standards Act (FLSA) of 1938 ensures that all salaried workers are guaranteed overtime pay at time-and-a-half for any hours worked beyond the standard 40-hour workweek. The FLSA uses a salary threshold, which says that every employee making under a specific threshold must be paid overtime.
What changes does the new rule make?
The new rule doubles the annual salary threshold from $23,660 to $47,476.
How does the new rule affect who gets overtime?
Every full-time, salaried employee making less than $47,476 annually (or $913/week) will now be eligible for overtime pay.
What about employees above $47,476?
Employees whose salary is between $47,476 and $134,004 are exempt from overtime if they fall into specific categories, including executive, administrative and professional (learned or creative).
What impact will this have on design firms?
Due to the threshold for professional employees, many architects won’t be directly impacted by the new threshold - but that doesn’t mean that firms won’t feel the effects. Even if every design professional in your firm is already earning above the new threshold, there are likely support staff and others to consider (and whose weekly hours you might need to start tracking closely).
Will the threshold be raised again in the future?
Under the rule, the salary threshold will be updated every three years, based on wage growth over time.
When will the change happen?
The increase goes into effect December 1, 2016.
What can my firm do to start preparing?
Planning is key. December 2016 will be here in no time; firms need to ensure they are not caught off guard. Consider how other related businesses, like those with which your firm subcontracts, might be impacted by new labor costs, and incorporate that into future business projections.
Where can I get more information?
Visit the Labor Department’s overtime rule resource page. It is also recommended you consult with qualified employment/HR professionals.
Alex Ford is the federal relations manager at AIA.