Paducah area business leaders prepare for new overtime rules

Although Kentucky Gov. Matt Bevin is joining 20 states in a lawsuit against the U.S. Department of Labor regarding new federal overtime regulations, Paducah area business leaders are preparing for the changes going into effect Dec. 1.

The rules include raising the overtime salary threshold to $47,476 a year, or $913 weekly. Anyone who makes less than and doesn’t get paid hourly must receive overtime pay.

At a seminar on the changes led by Randall Fox of Capstone HR Services, Inc. at the Paducah Area Chamber of Commerce, management heard who can be exempt from overtime. That includes employees who are salaried at the above threshold and those whose work duties are included in one of these six categories: executive, administrative, professional, computer professional, outside sales, and — in Kentucky only — supervisor.

There is still some confusion about which jobs will be exempt. Lisa Dapp, manager of Rolling Hills Country Club, said she believes seasonal work, such as work on a golf course, will take an unfair blow. “There should be exceptions made for businesses like ours," Dapp said,

One of their salaried employees, Clint Westerfield, works more than 40 hours a week nearly every week between the months of May to September. There is a tradeoff, though. Salaried employees, who work extra hours in the summer, work less in winter months. “People don’t play that much golf during the wintertime, so for us it’s not that important that were here eight hours a day,” Westerfield said.

Dapp hoped the seminar would provide an out on the possibility of switching some of their eight salaried employees to hourly, cutting their hours, or paying them less during winter months. “They enjoy that, look forward to the winters, and don’t mind putting in the extra hours in the summer,” Dapp told me.

Westerfield takes pride in being salaried because, he said: “You just don’t have to worry about 15 minutes over here or 15 minutes under there.”

Fox advised bosses and human resources directors to either cut back on overtime or hire additional employees to avoid overtime pay to save money on payroll.

These new rules affect everyone with a payroll, with the exception of nonprofit groups operating under $500,000 that don’t do business across state lines. Penalties vary by the type of violation.  

Below are highlights from the meeting hosted by the Paducah Chamber of Commerce, presented by Randall Fox. I have permission to share this information. Fox advised the group this morning that this is NOT legal advice.


July 2015 – Department of Labor proposed rules

Adjustments after 60-day public comment period

May 2016 – final regulations issues

Small business:

Size doesn’t matter. If you have a payroll, you must comply. *Only exception included non-profits with operating budget less than $500,000. Non-profit must also NOT do business across state lines.

Who does this affect?

This affects non-exempt employees. Exempt employees must:

  1. Be salaried:
  1. receive a predetermined pay each pay check
  2. No docking in pay (unless under one of these seven circumstances: absence for one or more full days for personal reasons other than sickness; absence for one or more days for sickness, if without a sick-pay plan; off-setting extra income like jury duty stipend or military pay; penalties for violating major safety rules; unpaid full days of disciplinary suspension; pro-rated days in the first or last week of employment; unpaid FMLA leave)
  3. No reduction for variations, quantity or quality of work
  1. Make $47,476 or at least $913 per week

Bonuses and Incentives:

They can account for 10% of an employee’s salary, but it must be non-discretionary and be paid quarterly that amount. This would exclude end-of-the –year and Christmas bonuses.

Business Options:

Make salaried workers hourly, document time, pay overtime pay

Cut back on overtime

Hire more employees if overtime pay becomes excessive

***Avoid using ‘independent contractor’ title as an exemption from pay. There are specific criteria and you could face hefty fines*** 

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