More hours worked greater economic reward right? The latest action by the Department of Labor (DOL) says, yes, as eligibility for overtime pay is expanding to include millions of U.S. workers who were previously “exempt” from the overtime provisions of the Fair Labor Standards Act. This rule will now make more Americans eligible for overtime pay and is described as a change intended to raise the standard of living for the middle class.
Currently, employees in executive, administrative, and professional positions who are paid a salary of $23,660 ($455 a week) or more are not entitled to overtime premium pay. The new rule increases the salary threshold by almost double to $47,476 ($913 a week). This means that in order to be considered exempt from overtime pay, a person in one of these positions must be paid a salary of more than $47,476 annually. Or stated another way, if you are an executive, administrative or professional employee and paid a salary of less than $47,467 a year, you will qualify for overtime pay (assuming some other special exemption does not apply to you). With the new eligibility requirements, it is estimated that an additional 4.2 million Americans will now be eligible for overtime pay or time-and-a-half for each hour worked in addition to the regular 40 hour work week.
The article Millions more Americans to be eligible for overtime pay at USA Today reports, “some businesses welcome the measure, many say it will simply force them to reshuffle salaries to get around the regulation. Others fear it will mean demoting white-collar workers and altering workplace cultures.”
In addition to these changes, the new rule also clarifies the duties of employees considered “exempt” from overtime pay. Because of this, an estimated 8.9 million misclassified workers may also become eligible for overtime pay. The new rule also raises the total annual compensation for “highly compensated employees” who were exempt from overtime because they made more than $100,000 (and met a less stringent duties test than required under the executive, administrative, and professional exemption) to $134,000. So, if you were told you do not qualify for overtime because you are highly compensated and you make between $100,000 and $134,000, it is time to reevaluate your eligibility for overtime pay.
According to the figures reported, “The share of full-time workers who qualify for overtime has fallen from 62% in 1975 to 7% today, according to the administration. The new rule, which would take effect Dec. 1, would allow 35% of workers to qualify.” This recent threshold is set to be raised every three years and will increase to $51,000 on Jan. 1, 2020. The White House estimates this rule will, “boost wages for workers by $12 billion over the next 10 years.”
Following the action, various tactics may be adopted by employers hoping to avoid paying overtime to newly eligible workers. Companies may attempt to convert salaried workers back to wage workers, monitor hours, and actively manage overtime hours. Some may continue to pay employees on a salary basis but will have to track hours and pay a premium for hours worked over 40. Still others may cut pay to offset the additional cost of paying an overtime premium, or instead raise the worker’s pay to meet the minimum requirements for overtime exemption.
Many are concerned that the new law will pose a significant burden to small businesses, and some may be forced to bring on part-time employees to make up for the overtime pay they cannot afford to pay.
According to the White House blog, a message by President Obama stated, “If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones. It’s one of most important steps we’re taking to help grow middle-class wages and put $12 billion more dollars in the pockets of hardworking Americans over the next 10 years.”
Do you qualify for overtime pay under the new rule?
If so, we can help you evaluate the next steps to collect unpaid overtime wages. If your employer does not step up to the plate on December 1, 2016 and pay you the required overtime wages. Contact an experienced employment law attorney at Wenzel Fenton Cabassa, P.A for more information on how to go about collecting unpaid overtime. Give us a call for a free confidential consultation today.
Please Note: At the time this article was written, the information contained within it was current based on the prevailing law at the time. Laws and precedents are subject to change, so this information may not be up to date. Always speak with a law firm regarding any legal situation to get the most current information available.