The U.S. Department of Labor, directed by President Obama, recently made sweeping changes to the overtime rule that affects millions of employees that are currently considered ineligible for overtime pay.
Starting on December 1, 2016, millions of previously ineligible employees will now be eligible for overtime. The new rule affects exempt employees.
What is the difference between an exempt and non-exempt employee?
The Fair Labor Standards Act (FLSA) governs which employees are eligible for overtime pay based on their exempt or non-exempt status:
- Non-exempt employees are eligible for overtime pay, which applies to any hours worked beyond 40. Nonexempt employees are generally hourly (non-salaried) employees.
- Exempt employees are not eligible for overtime pay, unless they meet the following criteria:
- Salary is less than $47,476 (the old amount was $23,660)
- Is paid a salary (as opposed to receiving an hourly wage)
- Job duties fall within the scope of what exempt employees do
The changes will take effect on December 1, 2016, and employers must implement the rule by then.
What do the changes mean?
More exempt employees will be eligible for overtime pay: approximately 4.2 million employees will be affected.
Under the old rules, exempt employees were not paid for overtime work if they made more than $23,660 a year. Exempt salaried employees who worked 50 or 60 hours a week were not paid extra for those hours.
Starting on December 1, salaried employees who are under the new salary threshold must be paid for any hours worked over 40.
Employers generally have two options: Pay qualifying employees time-and-a-half for overtime hours, or increase the employee’s salary to above the new threshold ($47,476).
Do you have questions about the new overtime rule? Has your employer failed to pay you for overtime hours, even though you qualify? Talk to an employment attorney from Bononi Law Group in a free consultation: 213-550-5503.
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