"My feeling is that owners don't even know about it yet," said Steven A. Feinberg, a Fiducial franchisee, in Londonderry, NH. Feinberg affirms that overtime is a "hot issue" at the moment since it directly targets clients.

"From an employer's perspective, it's a good deal," he said. "They say 'now I don't have to pay overtime because they put this dollar threshold on it.' That's the main thrust."

The DOL issued these rules to address concerns from employers claiming that the regulations were too hard to understand and apply. Employers thought it was too easy to mistakenly violate the overtime pay rules. Employees felt that the rules contained "loopholes" that allowed employers to avoid paying millions of employees their rightful overtime pay.

The American Payroll Association (APA) supported efforts to modernize these labor provisions but told the DOL earlier this year that it needed to provide further guidance to help avoid employer confusion and forestall employer audits, employee complaints and litigation as it pertains to worker classification matters. APA officials were pleased with the final results.

"They raised the salary threshold to $23,660 which totally eliminates the need for employers to determine which employees are exempt or not exempt if their employees make less than this salary per year," said Andrew McDevitt, APA's manager of government relations in Washington, D.C.

Former rules were old, complex and confusing
The labor department maintains that the new regulations, also called the FairPay rules, are designed to make the Fair Labor Standards Act (FLSA) more relevant to today's workplace. Much has changed from 50 years ago when the laws originally went on the books, including technology-related jobs that didn't even exist. The DOL also hopes the new rules will help reduce increasing litigation over wage and overtime issues. (Readers can learn more about these rules on the DOL's website at http://www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm.)

"These are important rules and we are working diligently to educate employers and employees about these provisions," said Alfred Burgess Robinson, Jr., who assumed his new post earlier this week as Acting Administrator of the DOL's Wage and Hour Division.

The reason for the new rules, Robinson said, is because the former ones were "old, complex and confusing." For instance, the salary bases were last adjusted in the mid-1970s and the job duties test has not been updated since the 1940s.

"My favorite example is a reference to a job title of 'gang leader' which today has a very different meaning," he said. "Job titles don't govern overtime-it's what a person's job duties are that will determine their status."

According to FSLA, workers are generally entitled to receive time and a half pay for all hours worked over 40 hours a week. But the law includes some general exceptions for those who perform certain executive, administrative, professional, computer or outside sales duties.

Rules changes go in the right direction
One of the key provisions centered on police officers, firefighters, paramedics, and other public safety personnel (so-called "first responders") who some speculated could have lost their overtime benefits. But APA's McDevitt said the DOL "has gone in the right direction. They've definitely made it pretty clear that these folks are not going to be in the equation."

In addition, the prior $155 a week minimum salary level for exemption increases to $455 a week. So employees earning less than $23,660 a year must generally be paid overtime.

"We've increased the salary at a level that will protect low-level employees," DOL's Robinson said. "The duties test is now standard. We're helping restore overtime eligibility, strengthening the rules and protecting the low wage employees."

The new rules also define the types of infractions for which an employer may legitimately dock the pay of an exempt employee. The labor department intends to publish provisions at a later date to address the issue of improper pay deductions.

"For small businesses who don't have quite the resources to know all the intricate components of labor law, the DOL is going to create a safe harbor policy for that community," McDevitt said.

Any employers who are going to dock the pay of any workers should have legal counsel look these matters over. "Of course, it's always good to do that," he said. "It might cost you a little bit of time but it will save you later on if an issue comes up."

Highly compensated individuals earning at least $100,000 a year will be exempt from overtime pay if they "customarily and regularly" perform at least one of the duties of an executive, administrative, or professional employee.

On the flip side, there won't be any sticker shock either for companies who employ "blue-collar" workers like landscapers since overtime pay exemptions do not apply to manual laborers or other such workers.

Fiducial's Feinberg said, "Nine times out of 10, they're probably already paying overtime to these workers."

Helping owners take a second look
While small business owners won't be dramatically impacted by these changes in overtime, Feinberg said they will need to take a second look at their operations.

"If anything, it will force these employers to reevaluate their relations with their employees and determine whether they need to pay overtime or can they truly be salaried employees," he said.

DOL's Robinson agreed.

"Most business owners are really using this opportunity to review their practices for employees who they classified as exempt," he said. "We believe these clear rules will help employers and they'll make the correct modifications."

STEPHEN PAREZO is the Media Manager for Fiducial.