Sweeping changes to federal overtime regulations are set to go into effect next year, raising the income level at which millions of salaried employees across the United States will now qualify for overtime pay.
Currently, U.S. Department of Labor regulations do not require employers to pay overtime to salaried employees who earn more than $455 per week, or $23,660 annually. But in 2016, the DOL is set to raise this earnings threshold to $970 per week, or $50,440 annually. The department also plans to automatically increase the threshold amount every year, to prevent the level from again becoming outdated.
It is the first time in more than a decade that the so-called “white collar” exemption has been revised. According to a White House press release, the upcoming changes will give about five million American workers a raise, while at the same time increasing overtime protections under the Fair Labor Standards Act for millions more employees.
In addition to the higher threshold for overtime eligibility, the DOL has also hinted at changing the overtime rule’s “duties test.” Currently, employees can be exempt even if they spend 50 percent or less of their time performing exempt duties, if such duties are the reason for their job.
The duties test may change under the new overtime rule. While the DOL did not specifically suggest any revisions, the Department did ask questions about it, indicating a concern that workers may be exempt despite spending a relatively small amount of time on exempt duties.
The new rule has not been without controversy, as evidenced by the nearly 250,000 comments the DOL received when it asked for feedback on the proposal over the summer.
According to Law 360 (subscription required), those who favor the rule say it will give employees who have historically been underpaid a much-needed boost in pay. Supporters say the rule will also keep companies from dodging their overtime obligations by misclassifying workers and the rule is more in line with the intent of the FLSA, which is to protect workers.
The attorneys in Sommers Schwartz’s Employment Litigation Group are knowledgeable in all aspects of the new overtime rule and FLSA protections. If you suspect that you have been unjustly denied overtime compensation, contact us to learn how we can help.