The Law of Unintended Consequences

Posted by Ed Purcell on June 17, 2016

Isaac Newton taught us for every action there is an equal and opposite reaction. This natural law holds true for companies needing to digest coming changes to overtime pay regulations, which will more than double the minimum salary level eligible for overtime benefits when these become effective on December 1, 2016.

Earlier this week in a webinar hosted by Ogletree Deakins, Armada Risk Partners shared several likely direct and indirect impacts of the new salary and overtime regulations. Ultimately, the effect on employee benefit plans will be driven by the approach each employer takes to mitigate its particular challenges. Mitigation paths include:         
  • Status quo – paying overtime
  • Increasing salaries above threshold
  • Re-classifying employees as hourly
  • More closely tracking and/or limiting hours worked
  • Some combination of the above
Regardless of path chosen, the end result will either produce an increase in overall compensation budgets or a status quo resulting from some type of change. Either scenario will have a trickle-down cost to employee benefits that can’t be avoided.

If you would like to know more, click the link below to learn about the impact of each potential mitigation path, in addition to reviews of next steps and strategies employers can take to offset potential increases to overall compensation budgets:

The Final Overtime Regulations: What the New Minimum Salary Requirements Mean for Employers

About the author Ed Purcell

Ed Purcell leads the employee benefits consulting arm of Cleveland-based Armada Risk Partners, an all risk insurance brokerage. As a Senior Vice President and founder, he focuses his counsel on assisting small and middle market employers when developing and executing innovative and cost-efficient employee benefit strategies.