How is the new Overtime Rule going to Affect Me?

Earlier this week, The United States Department of Labor announced that they were going to make changes with the overtime requirements that would subsequently effect employees and employers alike. The plan has received criticism from some employers and praise from most employees. Regardless of whether you are an employer or an employee, it is important to know what the new rule requires.

Under the new rule announced by the White House, employees making a salary of less than $47,476 will automatically qualify for overtime pay when the employee works more than 40 hours in one week. The current threshold for requiring the employer to pay overtime wages to an employee who works more than 40 hours is $23,660. Despite the fact salary employees often work more than 40 hours in a week, they are currently not eligible for overtime pay if they make more than $23,660. Starting December 1, 2016, if an employee who earns less than $47,476 and works more than 40 hours in a week, the person will automatically qualify for overtime pay.

   The biggest question surrounding this announcement is how the employers will react. Some have predicted that employers will simply cap the hours an employee can work at 40 to prevent the employee from being eligible. Others predict that if an employee makes right below $47,476, the employer may opt to give the employee a raise just high enough to get him or her over the $47,476. Doing this may cost the employer money initially but depending on the specific employee, it could save the employer more money by not having to pay overtime wages every paycheck.

Every employer/employee relationship is different. Naturally how the employer in any given situation reacts will vary. Regardless if you are an employee or an employer, you need to know your rights and understand what you can do to either earn more money, or save it.

If you have any questions about this rule change and are wondering how it may affect you, do not hesitate to call my office.