RothLawBusiness Services, Government Agencies

It has been a couple of weeks since the Department of Labor finalized new rules for overtime compensation.  In our 24/7 news cycle, those changes stayed on the front pages for a couple of hours.  And yet, they will have repercussions for millions of employees and thousands of businesses.

Impactful as those changes may be, most smaller businesses do not understand (and why should they?) the arcane rules that govern overtime.  And because they are arcane, this blog can in no way substitute for legal advice.  The only good advice is to contact a skilled attorney.  But it might help business owners start thinking.

Let us start at the beginning for our most likely readers: there are no Florida overtime laws.  None.  You only have to pay overtime if you fall under the federal statute, the Fair Labor Standards Act (“FLSA”) and its regulations – and many Florida businesses do.  The FLSA applies the moment you make more than $500,000 in gross revenue in a year, or for an employee working across state lines, for instance.  The money threshold is revenue, not profit.  Every dollar that comes through the door counts.  When that happens, your FLSA obligations are immediately triggered, regardless of how many employees you have. Within some industries like hospitality and healthcare, there is no threshold at all.

Once you are covered by the FLSA, you must pay employees time and a half for every hour they work over 40 in any given week.  The pay period does not matter.  Certainly, overtime is paid whenever employees receive their base pay.  But it is calculated on a one-week basis.

The big question is then, who is “exempt” – meaning, who does not have to be paid overtime?  Three things must happen before an employee stops qualifying for OT.

First, most exempt employees must be paid a salary, not hourly wages – not all, but most.  That does not mean that you are making an employee exempt by paying them a salary.  It only means that if you don’t, chances are good you qualified them as overtime-eligible.

Second, and that is the rule that changed and will become effective December 1, only employees who make more than $47,892 a year can be exempted from overtime.  (It used to be half that.)  It does not matter what their duties are.  In parts of the country, you might find non-profits or small retail operations whose top level people make less than that.  It does not matter.  If they make less than that magical number, they must be paid overtime, end of story.

Finally, even if they are paid enough and (in most cases) on a salary, only those with certain job duties may not have to be paid overtime.  There is a rather long list and longer DOL interpretations of what the list includes.  Some exemptions can be quite narrow.  Others may seem intuitive but are less than obvious in reality.  Managers who exercise discretion and independent judgment with respect to matters of significance to the business are exempted, for example, but just when they exercise enough judgment, or when it is exercised on matters of sufficient importance, can be tricky to gauge.

No-one knows what they don’t know, sometimes until it is too late and fines start raining down from government regulators.  The best offense is a good defense – and a good lawyer.