New Overtime Rule To Extend To Million Of Additional Workers

Office Business people working overtime

Beginning December 1st, If You Make Less Than $47,476 You Will Be Entitled To Overtime Pay!

By: Daniela Carrion

Today,  President Obama and The United States Secretary of Labor, Thomas Perez announced the final rule updating the overtime regulations under the Federal Labor Standard Act.  The new rule will extend overtime protection to million of additional workers.

With the passage of the Fair Labor Standards Act, many Americans acquired the right to a minimum wage and time and a half pay for more than 40 hours of work in a workweek. These rules have applied to most hourly employees, and salaried employees who earned less than $23,660. However, some salaried employees have been exempted due to the kind of duties they perform. Normally these included managerial positions, and white collar workers. Currently

establishing that a white collar worker is not entitled to overtime pay involves clearing two hurdles: (1) assessing whether their salary is above the threshold and (2) applying a “duties test” to ensure that they have the kind of job that Congress meant to exclude from overtime protections.

The new rule will raise the salary threshold to equal the 40th percentile of yearly earnings for full time salaried workers in the lowest-wage census region, currently the south. This will raise the overtime pay eligibility to workers earning less than $47,476 a year. Further under the final rule, employees whose salaries fall below the new threshold will become clearer as no further assessment of their duties will be necessary. The final rule will also allow up to 10 percent of the salary threshold for exempt employees to be met by non-discretionary bonuses, incentive payment or commissions, provided that these payments are made on at least a quarterly basis. The White house estimates that the change will bring overtime rights to 4.2 million American workers who are currently excluded. It will also clarify the eligibility for another 8.9 million workers who may or may or may not have overtime protections under the current rules.

The final rule will enable employers to have a choice between increasing their employees salaries to at least the threshold or pay the workers the overtime for the extra time worked. The Department of Labor has found that too many salaried employees are overworked, and their employers have no incentive to limit their hours because they aren’t required to provide additional pay when employees work more hours. Under this rule employers will have a renewed monetary incentive to support work life balance. The new rule will go into effect on December 1, 2016 and employers are expected to ensure that they are providing their employees their legal pay rights under the Fair Labor Standards Act.