Does New Overtime Rule Impact You? What Workers Need to Know
4.2 million more people may qualify for overtime
The Department of Labor (DOL) may be giving millions of workers an early holiday gift this year. As of December 1st, the agency’s new rule on overtime goes into effect.
However, while the DOL states that approximately 4.2 million people may be newly eligible for overtime thanks to the DOL’s rule change, not all of those people are likely to get it.
As with any government policy, this rule requires an in-depth look. While hopefully many companies will comply with the spirit of the law – that is, to fairly compensate workers for their time – there will certainly be some employers who will attempt to find ways to shortchange their employees.
That’s why it wise to know what the law says, and how it may affect you.
Rule Does Not Apply to Everyone
The first thing to know is that this rule change does not apply to non-exempt workers, who are most commonly paid on an hourly basis and already qualify for overtime compensation.
Rather, this rule impacts workers who currently meet all the requirements to be classified as an exempt executive, administrative, professional, or computer employee (sometimes referred to as the “White Collar Exemptions”), but who are paid on a salary or fee basis of less than $47,476 per year. As of December 1, 2016, those workers will be eligible to receive overtime pay for any hours worked over 40 in a given week. Overtime must be paid at time and a half.
Under the current rule, the amount that an employee must be paid before he or she is eligible for one of the White Collar Exemptions is substantially less: $23,660 annually, or just $455 per week. The rule change is intended to better reflect current economic conditions. The qualifying salary threshold is supposed to automatically update every three years to keep pace with inflation.
Who Will Benefit
The people who are likely to see the biggest impact may be those who have been promoted to supervisory positions and are therefore considered exempt, and who earn a salary of more than $23,660 and less than $47,476.
In many industries, these employees may work overtime every week without any additional pay. The result may be that the hourly employees that these workers supervise bring home bigger paychecks at the end of the week. Sometimes, these exempt workers put in so much overtime that their average hourly pay may come out to less than minimum wage.
What Companies May Do
Obviously, many companies are likely to attempt to minimize the economic impact of this rule. Rather than suddenly paying out lots of additional overtime, they may adjust staffing or compensation levels in various ways.
For example, some companies may increase workers’ salaries above the $47,476 threshold. While these workers will end up taking home additional money every week compared to their current salaries, they will not eligible for overtime compensation. However, they may still be expected to work more than 40 hours per week.
Some companies may cut workers’ hours to avoid paying overtime. While these workers will not bring home any additional money, they may have to spend less time at work. Meanwhile, these companies may need to hire additional employees to maintain staffing levels.
Some companies may re-classify workers as non-exempt. In some cases, this could result in lost benefits such as paid vacation time. However, employers must still adhere to the Fair Labor Standards Act rules on employee classification.
Contact Us for a Free Consultation
Wage and hour issues can be complicated. If you suspect that you’ve been misclassified, unfairly denied overtime, or shorted pay for any other reason, you may have been a victim of wage theft. It’s a good idea to speak to an attorney who has experience fighting for fair compensation for workers.
Email us at firstname.lastname@example.org, or call (267) 273-1054 for a free consultation.