This week the Department of Labor, following a 2014 mandate from President Barack Obama, updated a federal regulation making an additional 4 million salaried workers eligible to collect overtime pay.
According to a statement from the Labor Department, the updated regulation will “result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.”
The increase in employees eligible for overtime under the new regulation is not a small one. In Georgia 28.2% of salaried workers are newly eligible; nearly a third of Florida’s salaried employees (29.3%) are eligible; 20.9% of Ohio’s salaried employees are covered and a quarter of Texas salaried workers — 25.4% — could be seeing something extra in their paycheck.
The new regulation and how it could affect you and your pay
What is overtime?
According to the Department of Labor, overtime pay is pay for all hours worked over 40 in a workweek paid at a rate not less than one and one-half times their regular rate of pay.
What does the new overtime rule do?
The new regulation raises the salary threshold at which white-collar workers are exempt from overtime pay from $23,660 to $47,476. Meaning that a salaried employee who earns up to $47,476 are now eligible for overtime pay.
So who will be able to now get overtime?
From the Labor Department, here is the criteria to qualify under the new overtime rules.
A white collar employee generally must:
- Be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed
- Be paid up to the equivalent of $47,476 annually for a full-year worker
- Primarily perform executive, administrative, or professional duties, as defined in the Department’s regulations
If I get paid a salary and make more than $47,476, am I out of luck?
While it is aimed at those making less than $47,476, some people whose job includes specific duties will be able to collect overtime even though they make more than $47,476. If you supervise the work of two or more employees or part of your job requires you to use independent judgment in decisions for the company, then you could qualify for overtime. This Labor Department fact sheet offers more information on which job duties qualify for overtime.
What if I’m not a salaried, white-collar employee?
As a rule, if you are payed on an hourly basis, you are already entitled to overtime pay no matter what your salary is. This new regulation does not affect you.
Any way for an employer to get around it?
Not really. Employers can do a few of things that would change the status of the salaried employee, though. The could raise an employee’s salary so they are exempt from the overtime threshold, or they can convert a salaried employee into an hourly employee and then make sure the employee doesn’t work overtime hours.
Now that I’m eligible for overtime will I have to punch a time clock?
No. According to the Department of Labor, “The Fair Labor Standards Act requires that employers keep certain records for each nonexempt worker. Employers have options for accounting for workers’ hours – some of which are very low cost and burden. There is no particular form or order of records required and employers may choose how to record hours worked for overtime-eligible employees.”
When will these changes take effect?
The effective date of this Final Rule is December 1, 2016. On that day, the new standard salary level ($913 per week or $47,476 per year) will take effect.