Effective December 1, 2016, the Department of Labor is enacting a new overtime law in which the Fair Labor Standards Act is being changed, allowing the threshold annual income below which overtime pay is required (assuming all other requirements for overtime pay are satisfied) to rise to $47,500, compared to $23,660, which was the amount under the old law.
This means that salaried workers who make less than that amount will become eligible for overtime pay when they work more than 40 hours in a week. This is leaving millions of Americans wondering how the new overtime law will affect them. However, in order to understand how the new overtime law will affect you, you first must know how overtime pay works.
Understanding The Overtime Laws
Under the Fair Labor Standards Act (FLSA), a non-exempt employee, who qualifies for overtime, must receive time-and-a-half pay for any hours worked over 40 hours during a work week.
However, The FLSA also contains dozens of exemptions under which specific categories of employees are exempted from overtime requirements.
Employees that are considered exempt, and ineligible for overtime, are so if their job passes a duties and salary test, and involves the responsibilities as defined by the Labor Department. These positions typically consist of administrative, executive, and professional employees, as well as computer professionals, and employees who perform outside sales.
Exemptions from the overtime requirements of the FLSA are exceptions to the rule and are very narrowly construed by the courts. An employer will always have the burden to prove that he has correctly classified an employee as exempt, otherwise he could be liable to pay double the unpaid overtime plus the employees’ legal expenses.
Understanding The Changes To The Overtime Laws
While the only major change to the FLSA’s overtime law is the salary threshold for exempt employees, which is almost doubling, this is leaving many employees wondering if they will now be considered non-exempt, becoming entitled to overtime.
The Labor Department has concluded that people who have the title of “Manager” or “Assistant Manager”, especially in retail or service operations, may be the ones who will be more affected than others, simply because of what their responsibilities entail and how much they are paid. This means that if their position can’t pass both the duties and salary tests, they will now be entitled to overtime pay.
The new overtime laws could be quite costly for employers. This is where employers may look to make meaningful changes in job duties (not just titles) to ensure they don’t become liable for overtime pay to employees who were not entitled to overtime pay in the past.
For more information or any questions that you may have in regards to your employment rights or eligibility to receive overtime pay or your duty to pay overtime, contact the attorneys at Maduff & Maduff today.