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Payroll Budget-Buster Alert! Proposed Overtime Eligibility Rule Could Impact Your Bottomline

Updated: Jan 16

A newly proposed rule under the Fair Labor Standards Act (FLSA) could increase the salary threshold from $35,568 to $55,068 to qualify for overtime (OT) exemption for Executive, Administrative and Professional employees. If you’re a Covered Employer under the FLSA, this means that your payroll budget could be subject to increase due to more employees being eligible for overtime (OT) pay. The rule also creates a higher salary threshold for Highly Compensated Employees. In total, it's estimated that 3.6 million more employees would be eligible for overtime if the new FLSA rule becomes effective. So, what can you do to prepare for this potential change to overtime eligibility? Take proactive action.


Start by evaluating your relevant workforce data to understand the impact of more payroll costs on your bottom line. As a quick guide, here are six (6) things to consider as a best practice:

  • Who are the potentially impacted employees?

  • What job duties are potentially impacted employees performing?

  • Do you have proper timekeeping systems for tracking overtime accurately?

  • What policies do you have in place for authorizing and approving overtime?

  • Are there trainings required to ensure employees and managers are complying with pay policies?

  • Assess hours worked data for potentially impacted employees to estimate budget increases.

While the proposed FLSA rule may encounter some hurdles, staying compliant with pay practices should always be a priority. As more states pass pay equity and pay transparency laws, the risks related to pay compliance is becoming exponentially greater. Therefore, taking proactive action to stay compliant with pay practices is now a business necessity. Fostering a data-driven culture as a way of managing compliance in pay (and otherwise) is a highly recommended best practice approach. Doing nothing or being reactive could result in a payout that exceeds payroll. Avoid payroll budget-busting risks and stay compliant.


Contact us for a FREE consultation about a proactive approach for pay compliance at your organization. Click here https://calendly.com/tulipadvisory to schedule a call with one of the TULIP FLSA SMEs. Don’t wait until new rules take effect to address pay compliance – safeguard your business outcomes now!


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