Recently, the U.S. Department of Labor proposed a change to the current stipulations of the Fair Labor Standards Act. If these changes were to go into effect, an estimated 4.6 million workers would become eligible for overtime pay from their employers. While good news for mortgage workers, it would ultimately take a significant cut of mortgage companies’ bottom lines. Continue reading to learn more about this possible change and how to best adjust.
White Collar Exemption
The “white collar exemption” currently applies to workers who earn at least $455 a week (an annual salary of $23,660) and work primarily in executive, administrative, or professional roles. No matter how much these employees work, they do not receive overtime pay.
If the new rule goes into effect, then the minimum salary would be raised over twice as much, totaling to $970 per week and $50,400 annually. Employees making under that amount would then make at least time and a half for each hour they work over the 40-hour workweek limit.
How Should a Mortgage Company Respond?
The DOL changes could go into effect as soon as this spring. There’s a possibility that Congress will challenge the proposed amendments, but regardless, all lenders should make a plan.
It’s advised to determine exactly how much these changes will affect your company. Specifically, determine how many employees make over $23,660 per year but under $50,400. These are the employees who would become eligible for overtime pay. If these employees habitually work over 40 hours a week, calculate whether they’d make more or less money by getting a raise to the new “white collar exemption” wages. Otherwise, be prepared to pay them overtime. Another approach is to redistribute or lessen the workload in the office to ensure that fewer people work overtime in the first place.
What Else Should I Know?
The Department of Labor website has more information about this proposal on their website. It’s important to note that these changes only apply to companies whose annual gross volume of sales are higher than $500,000. There are also a few exceptions for schools, residential medical centers, hospitals, and some other public agencies. The last time there was an update on these regulations was in 2004. We shall soon see if the DOL decides if it’s time to raise those standards again.
Title Insurance and Closing Services from Champion Title
As rules and regulations change, you can always depend on Champion Title for title insurance and closing services that reduce cost and increase efficiency. We serve the Maryland, Virginia, and D.C. region with the highest quality services for title insurance, refinancing, 1031 exchange, residential sales and resales, and more. Visit our homepage today for more information.