The Department of Labor's proposed changes to "white collar" overtime exemptions are expected to be finalized and put into effect in late 2016 or early 2017. So it is important for business owners and managers to get ahead of the process by understanding the proposed rules and how they could affect payroll budgets.

  

Under the current Fair Labor Standards Act, salaried employees who earn at least $455 per week ($23,600 per year) do not have to be paid for any overtime hours they work. The Department of Labor's proposed regulations are expected to increase this threshold exemption level to $970 per week ($50,440 per year). The result will be that hundreds of thousands - perhaps millions - of salaried employees will immediately become eligible for overtime pay.

  

For example, a salaried employee earning $40,000 per year is currently exempt from overtime. But when the new regulations take effect that employee will fall below the expected $50,440 exemption level and be eligible for overtime compensation. If that employee works just one hour of overtime per week for 52 weeks, it will mean an additional $1,500 in payroll costs.