Overtime Exemption Rule Affects Dealerships

DOL Finalizes Overtime Exemption Rule – What Will It Cost Your Dealership?

The Department of Labor has issued the final version of its new overtime exemption rule. The overtime salary level exemption will be raised from $23,660 to $47,476 beginning December 1, 2016. That means that any exempt employees between these two salary levels will then be paid overtime rates for working over 40 hours in a week.

You can access the entire rule here: DOL – new overtime exemption rule.

Assess, Understand, Plan

You should assess the impact of the new regulations now so that you can plan ahead to minimize the financial impact to your business while maintaining productivity and good employee relationships.

Once you understand who is affected and how large the impact might be, you can plan for the change. Here are some options for you to consider:

  • Reclassify the employee from salary to hourly and set the hourly rate so total compensation remains the same for the expected hours of work.
  • Reclassify without adjusting calculated hourly rate and limit overtime the best you can.
  • Reclassify without adjusting rate and have employee keep working the same number of hours.
  • Bump their annual salary to $47,476 and don’t change their hours.
  • Don’t change anything — just start paying them for overtime at 1.5 times their calculated hourly rate for a 40 hour week.

This list of options is not complete, but it offers ideas as starting points. Of course, each option may have effects on labor costs, hours worked by these employees, and employee relationships. Trade-offs exist and should be carefully considered.

Contact Sam Agresti, Brady Ware’s Dealership Advisors Team Leader, if you would like some help examining the various alternatives and the impact on your business — sagresti@bradyware.com or 614.384.8410.

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