The New Overtime Law, and How It Could Affect Your Business

  • By Susan Burns
  • 26 May, 2016

On May 23rd, 2016, the U.S. Department of Labor published the final rule updating the overtime regulations for requiring employers to pay overtime to all eligible employees who work more than 40 hours per week.

President Barack Obama signed a Presidential Memorandum in 2014, instructing the Department of Labor to update the outdated regulations that affected white collar (exempt) workers regarding overtime and minimum wages. The purpose was to simplify and modernize the rules and make them easier to apply and understand.

With the new rules, announced on May 18th by President Obama and Labor Secretary Tom Perez, any worker who earns less than $47,476 must be paid overtime on any worked time over 40 hours per week.

Effective December 1, 2016, employers will have to:

-      Pay time-and-a-half for overtime

-      Raise workers’ salaries above the new threshold

-      Limit workers’ hours to 40 hours a week

-      A combination of the above


There are some exemptions to this law; for example certain sales, retail, or service employees who are paid on a commission basis; or agricultural workers who are paid a salary of at least $588 and whose employers gross $500,000 or more per year, or $477.75 per week for workers whose employers gross less than $500,000 per year.

Also, the minimum salary level will be increased every three years, beginning on January 1st, 2020.

How does the new law affect your company?

The first and obvious concern for business owners is the increase in labor costs. You need to consider what strategy may be most beneficial, both for your employees and your cash flow. Act cautiously, and don’t just raise everyone’s salary above the minimum or cut their hours to less than 40.

These new regulations are actually a gift. It gives you an opportunity to review your current operations and decide if you want to keep things as they are, or perhaps, streamline and become more efficient. Part of your analysis includes how you are currently using exempt staff. If they are working overtime, how much, when and why? Is it seasonal or continuous? How can you create efficiencies?

Your analysis should include not only if you are able to afford the new salaries, but also if you’d be able to keep up with them down the line. Also, be aware of the different scenarios that you could face if you convert your employees to non-exempt now or in the future. Keep your business needs in mind, and conduct a thorough analysis before making a sudden move that could hurt your entire operation.

Additional benefits of the new overtime rules include happier employees who are more productive. Having well-compensated employees, who don’t feel burnt out or exploited, means that they will be happy, satisfied employees. If they are happy, they will be more productive, which in the end is good for your company. However, as we said before, act carefully, and seek the advice of a savvy business counselor , before making big decisions.

Remember, you need to comply by December 1st, 2016. It is estimated that the new overtime law will benefit 4 million workers across the country. Let's   start working together   to define a plan that incorporates the new law and makes the most sense for your business growth.

You can find more information pertaining to Minnesota rules specifically in   this document , published by the Minnesota Department of Labor and Industry.


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The TPP is a piece of legislation I have been closely following, and recently had the opportunity to moderate a panel entitled, "The Impact of TPP on NAFTA: Opportunity for Strengthening Ties -- Or Recipe for Disaster." Panel members included Aristeo Lopez of the Mexican Embassy, Laura Sierra of Alston & Bird, Nicholas Guzman of Drinker, Biddle & Reath, and Greg Kanargelidis of Blake, Cassels & Graydon.


The American Bar Association Section of International sponsored this event with the intention of presenting US, Mexican, and Canadian standpoints on the TPP and the impact of its passage on NAFTA. What followed was a thoughtful and informative discussion, and although the topic is highly complex, I thought I'd share some highlights with you.


Ms. Sierra explained some of the political context surrounding the TPP, including that the US has historically been pro-trade, and this is the first time since 1992 that trade has been a significant issue in presidential election year politics. US FTAs are modeled after NAFTA. The agreement eliminates a significant number of tariffs that would be beneficial to US businesses, but there are dissenting voices. Some of the concerns include employment issues, the manipulation of currencies by various countries, and opposition in specific industries such as auto, segments of agriculture and pharmaceuticals and biologics whose concerns were not addressed in the agreement. For example, intellectual property protection for biologics is not included in the agreement.


Mr. Lopez pointed out the benefits of NAFTA--growth in trade between Mexico and the US, especially--and explained that the TPP is intended to expand upon this growth, with attention to subjects that were treated less comprehensively in NAFTA. Another goal of TPP, in Mr. Lopez' view, is to strengthen Mexico's ties to NAFTA and other FTA partners, allowing Mexican goods to reach new markets.


Mr. Kanargelidis noted that the TPP is not intended to replace or override NAFTA, but that the two agreements can co-exist. He pointed out US, Mexican, and Canadian businesses can operate under the clauses of whichever agreement is most favorable to them in a given transaction. For example, the "de minimis" value threshold is 10% under TPP, and only 7% under NAFTA.


An audience member posed the question of whether TPP shipments will be exempt from US Merchandise Processing Fees (MPF) like NAFTA shipments are. Mr. Guzman explained that even though TPP does away with "ad valorem" fees, US Customs might find another way to collect MPF that is compliant with the agreement. He also described the TPP's "focused value" methodology for determining goods' origin, which might be more stringent than NAFTA methods.


Opponents to the TPP often cite concerns about the Investor-State Dispute Settlement (ISDS) provision, which outlines the mechanism by which agreement disputes can be settled. Mr. Lopez explained that the TPP’s ISDS provisions are more transparent than those found in NAFTA.


At the conclusion of the panel, Ms. Sierra suggested that a full renegotiation of the TPP is unlikely, given that the agreement was difficult to reach in the first place, and that several countries have already ratified it. However, we might see some side letters that result in alterations to the text pertaining to certain issues. Panelists agreed that the TPP will pass. It’s a matter of time and final form.


The TPP has been negotiated between 12 countries who together form about 40% of GDP, and 1/3 of world trade. The agreement is of an unprecedented scope, and the implications of this agreement are huge. We will soon know if it can pass during the lame-duck session before the election, which is fast approaching!


To learn more about the TPP, visit this site . The full text of the agreement can be found here .



Granville, Kevin. “The Trans-Pacific Partnership, Explained.” The New York Times. 20 August 2016. Web.

 “The Trans-Pacific Partnership.” Office of the United States Trade Representative. Executive Office of the President. 2016. Web.
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