Under a new rule announced by the White House yesterday, anybody making a salary of less than $47,476 ($913 a week) will automatically qualify for overtime pay when they work more than 40 hours a week.
The current threshold is $23,660 (or $455 a week).
The change will go into effect on December 1, 2016.
The new rule is intended to expand overtime pay for those employees who are paid little but are exempt from overtime because they perform some marginal managerial duties.
In determining whether somebody’s salary meets the new threshold, employers will be allowed to include their bonuses and commissions up to 10% of the threshold amount.
The change is expected to affect the retail and restaurant industries the most, but will affect other industries as well.
TAKEAWAY FOR EMPLOYERS: If you have not already done so, you need to analyze all of your exempt positions and determine how to comply with the new rules by December 1, 2016.
TAKEAWAY FOR EMPLOYEES: The new rules will affect only those salaried workers who make between $23,660 and $47,476, have some managerial duties, and are classified as “exempt” from overtime pay. Under the new rules, such positions will be entitled to overtime pay. This means that your employer might limit your work hours or lower your hourly pay or make another adjustment by December 1, 2016 to meet the federal requirements.
Leiza Dolghih is the founder of Dolghih Law Group PLLC. She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.
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