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The Law of Unintended Consequences

By June 17, 2016April 27th, 2021Armada Blog

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 health and 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