By: Dan Rich
Clark, Campbell, Lancaster & Munson, P.A.
Q: What impact will proposed federal overtime changes have on me?
A: In the summer of 2015, the Department of Labor proposed and began taking comments on widespread changes to federal overtime laws. The Department of Labor has until July of this year to issue a final rule. The proposed rule would raise the income level at which employees can automatically qualify for overtime eligibility and marks the first time the government has drastically addressed this issue since 1975.
Currently, employees who automatically qualify for overtime pay are those earning $23,660 or less and any others who do not fall within the so-called “white-collar exemption.” The white-collar exemption provides that salaried workers who fall above the current limit are entitled to overtime pay only if they are not classified as administrators, executives, or professionals. Statistically, the current $23,660 overtime limit figure covers less than 8% of full-time salaried employees and falls below the poverty level for a family of four.
The new rule would mandate that all salaried employees, regardless of title or duties, are eligible for overtime if they earn $50,440 or less. The Department of Labor estimates that approximately 4.6 million employees who are currently exempt would receive overtime protection under the new law. The Obama administration proclaims that the new limit is necessary in order to compete with inflation, which has increased while the overtime threshold has remained the same.
Opponents of the law say that it will lead employers to, among other things, reclassify salaried workers as hourly employees or cut employee wages and bonuses or reduce hours to avoid paying overtime. But the biggest criticism is that the new overtime law will hurt small and mid-sized business who will struggle to absorb the increased labor costs.
Proponents of the change say that raising the salary threshold will help give employees more power and flexibility over their labor and fairer compensation for their increased productivity. Supporters also allege that the proposed overtime threshold change will increase employment, not decrease it, because employers are likely to add jobs or spread hours to underemployed workers to avoid paying overtime wages.
Putting both arguments aside, one thing is clear: raising the overtime threshold for automatic coverage would mean that earning overtime would no longer be contingent on what kind of work or the label your boss gives you. Regardless of title or duties, all employees earning a salary of $50,440 or less would potentially now be entitled to overtime compensation.
The March 24th edition of “The Law” will discuss potential pitfalls of buying property from foreign persons.
Dan Rich is an associate attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to email@example.com
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