The Department of Labor's (DOL) final overtime rule relating to the Fair Labor Standards Act (FLSA) was supposed to come into effect on December 1, 2016.* The new rule was projected to make about 4.2 million currently exempt employees eligible for overtime pay, according to the Society for Human Resource Management. However, on November 22, 2016, a U.S. District Court issued a preliminary injunction, temporarily blocking the overtime rule from going into effect. While the future of the final rule is uncertain, it's important to make sure you understand any financial impact it may have on how you classify employees so you can assess your overtime needs and remain compliant if the new rule becomes effective. Fortunately, there are a few great online tools that can help you.
Department of Labor FLSA Overtime Calculator Advisor
The Department of Labor offers a free calculator to help you estimate how much overtime an employee may be provided with for certain pay periods. You simply enter in how many hours the employee works on each day of a standard workweek and their hourly wage. Finally, you specify whether or not this employee earns any other type of compensation. With this information, the calculator will tell you whether an employee is entitled to overtime and how much he or she should earn in a standard week, based on the information you've input. This tool serves as a good starting point when calculating your overtime needs. However, it is important to remember that this tool does not allow for or assess employee job duties, which are relevant for determining who may or may not be eligible for overtime.
FLSA Overtime Calculator
ADP has developed a new calculator to help you should the DOL final rule come into effect. With this calculator, you can enter in how many administrative, executive and professional exempt employees you have that currently earn a salary between $23,660 a year (the current minimum salary threshold required to qualify for the exemption) and $47,476 a year (the new minimum salary threshold required to qualify for the exemption). These are the majority of currently exempt employees who, under the final rule, will be eligible for overtime if their salaries are not increased to the new minimum threshold. If you have an employee whose salary falls below this threshold, you can either pay him or her more overtime for hours worked over 40 in a workweek or increase his or her salary to at least $47,476 per year, provided that they continue to perform the applicable job duties that qualify them for an exemption. It's important to note that some states may have more stringent overtime rules that may apply to these employees. If you are unsure about the laws in your state, you may want to consider seeking legal counsel from an experienced attorney who specializes in employment law.
With the calculator, you enter in an employee's salary, the number of hours he or she works per week and whether he or she receives any extra compensation on top of an hourly wage, which may influence the employee's regular rate. The calculator will then show you how much it would cost to pay overtime versus increasing the employee's salary, allowing you to choose the most cost-effective solution.
Salary Paycheck Calculator and Hourly Paycheck Calculator
Once you know how much overtime you will need to pay these employees, you should also figure out how the taxes will work out. Normally, you would do this through your payroll provider. However, if you're interested in estimating the numbers now, or if your employees want to see what their future paycheck will look like, ADP also has a free salary paycheck calculator.
When you input an employee's new salary information, the calculator can estimate how much will need to be deducted for taxes, FICA and Medicare. Employees can also input additional information, such as whether they are making voluntary deductions into a plan like an HSA or 401(k). There are two versions of the tool: One lets you input hourly pay while the other works on total pay for the year. Both calculators help you estimate how relevant taxes will impact the new incomes.
By spending a little time with these online tools, you can help ensure that you stay compliant now and in the future.
* A U.S. District Court has temporarily blocked the new overtime rules from going into effect on December 1, 2016. Read the Eye on Washington to learn more.
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