Employment Law Alert: New Rules Expected For Overtime Pay
NEW PROPOSAL: President Obama has announced that the White House is raising the threshold income level at which workers are exempt from overtime pay of time-and-a-half wages. The level is currently $23,360 a year. The new level is expected to be $50,400.00 a year.
CURRENTLY: Under current rules, workers are not eligible for overtime pay when they work more than 40 hours a week if they are classified as “executive,” “administrative” or “professional” and are paid more than $455 per week ($23,600/yr.).
Currently, any salaried employee who’s paid more than $455 a week can be called a “manager,” given limited supervisory duties and made ineligible for overtime.
With the higher threshold, many more workers – from fast food and retail supervisors to bank branch managers and insurance claims adjusters – would become eligible for overtime.
EFFECT: Workers who earn less than $970 a week ($50,400/yr.) would be eligible for overtime pay if they work more than 40 hours a week under the new proposal.
WHEN: The proposed changes will be open for public comment and could take months to finalize. The changes can be enacted through regulation, without approval by the Congress.
Although the Labor Department’s estimates suggest the proposal would raise wages for 5 million people, other estimates are far higher. The Economic Policy Institute, a liberal think tank, recently estimated that a threshold of $970 a week would cover 15 million people.
We will update you when the new proposal becomes final.