Dive Brief:
- The Department of Labor says that by 2020 its overtime exemption threshold, part of the federal government's new final overtime rule, will be somewhere around $50,000, give or take a few hundred dollars. But a recent WorldatWork report predicts the exemption could be much higher — more like $70,966 by then, according to Employee Benefits News.
- Cara Woodson Welch, vice president at WorldatWork, told EBN that the Labor Dept. has grossly underestimated how many currently exempt full-time workers will be reclassified as hourly work.
- She explains that with the expected number of employees being reclassified as non-exempt, the formula for determining the percentage of full-time salaries may well keep shrinking with every three years' automatic update and lead to misleadingly high salaries.
Dive Insight:
Employers can try a range of strategies on how to classify employees and the benefits employees receive under the various classifications (The new rule, which takes effect Dec. 1, 2016) raised the threshold from $23,660 annually to $47,476).
Some observers say while the threshold needed to be raised, it might be too large a raise in too short a time. Leonard Sanicola, a spokesperson specializing in benefits for WorldatWork, expects to see reductions in employee benefits (due to more people with higher incomes) to be much more dramatic than in 2004, the last time the number was raised.
One solution to the dramatic increase of more hourly workers (due to the $70,966 threshold projected by WorldatWork) may be to standardize benefits between hourly and salaried workers, according to EBN.