The Federal Department of Labor (DOL) is taking steps earlier than anticipated to implement new proposed overtime rules.  These proposed rules significantly increase the minimum salary that must be paid to an employee to be exempt from overtime.  The new rule will increase the minimum salary from the current level of $23,660 to $50,440 annually. We now expect the NEW overtime rules may go into effect as early as July 2016.  The earlier implementation date effectively prohibits Congress from utilizing the Congressional Review Act to try to rescind or alter the rule once it is final.

Be Prepared to Make Changes for Exempt Positions

THLA is working with the American Hotel & Lodging Association (AH&LA) and the Partnership to Protect Workplace Opportunity (PPWO), on this issue.  We do not yet know the exact date that DOL’s proposed rules will become effective, or even the final wording for the rules.  We will advise our Texas members of the final effective date and final rules as soon as we get that information.

In the interim, we are advising our members to be prepared to make changes to your overtime policies for overtime-exempt employees who will be affected by the anticipated increase in the base salary requirement.

  1. For example, if any of your overtime-exempt employees’ current annual salary is just below the new minimum threshold, you may want to consider increasing that employee’s base pay to at least the new minimum threshold.  Keep in mind however, that  this employee’s duties must also continue to meet the other threshold requirements for an exempt employee.  THLA legal department staff can help you with this analysis.
  2. If it makes more financial and organizational sense, you can consider converting employees who are currently overtime-exempt to an hourly wage, and pay those employees time and one-half for all hours worked in excess of 40 hours in any work week.  Again, THLA legal department staff can assist on how to legally transition these employees to a different pay format.
  3. Another option is to hire additional employees and reduce hours for all employees to minimize the impact of any potential overtime compensation requirements.

THLA will provide further updates on this issue as they develop. If you have any questions, please do not hesitate to contact THLA’s legal department.  You may reach them at 512-474-2996.