On May 18, 2016, the Department of Labor announced its new rule updating overtime regulations greatly expanding the number of employees eligible to receive time and a half overtime pay under the federal Fair Labor Standards Act.
This long anticipated rule change promises to provide a much needed boost in pay to millions of American workers who, until now, have been deemed ineligible for overtime wages. In 1975, more that 60% of salaried workers were eligible for overtime. A combination of inflation and regulatory changes enacted by the George W. Bush Administration severely reduced eligibility for overtime pay to a mere 7 percent of salaried workers today. See http://www.npr.org/2016/05/17/478463549/millions-to-be-eligible-for-overtime-under-new-rule-obama-administration-rule
Under current law, a salaried worker paid between $23,660 and $46,476 performing some managerial duties is considered “exempt” from overtime pay. The new rule will now classify such employees as “non-exempt” and eligible for time and half overtime pay for hours worked in excess of 40 hours per week.
Employees anticipated to benefit from the new rule include those employed in the retail and service industries as lower level managers paid via salary. Such workers are often asked to work far in excess of 40-hours per week, but until now, have not received any additional compensation for their additional hours worked.
New Rule Highlights
The new rule goes into effect on December 1, 2016;
Employees earning up to $47,476 annually/$913 per week will be eligible for overtime compensation regardless of whether they perform some managerial duties and regardless of whether they are paid a salary and not an hourly wage. This level represents the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South;
The rule sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004);
Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption; and
The final rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
Protect your rights. While the new rule places responsibility on employers to properly account for employee hours and make appropriate adjustments to your pay, starting December 1, 2016, employees should monitor their own hours to ensure their employer’s compliance with the law.
The experienced attorneys at the Zazzali Firm stand ready to answer any questions you may have regarding your eligibility for overtime and, if necessary, help you to enforce your rights. Please direct any inquiries to firstname.lastname@example.org, subject “overtime pay.” Please leave your name, number and contact information.
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