On Tuesday, the Obama administration brought to light a new rule that would make millions of Americans eligible for overtime pay. Some businesses oppose to the new measure, stating that they would reshuffle salaries in an effort to avoid the regulations. Some businesses are in favor of it, and others fear that some workers may demoted and workplace culture could change.
The rule makes it so the executive, administrative, and professional employee salary exemption threshold will double from the current $23,660 to $47,476. This essentially means that roughly 4.2 million workers will be newly eligible to receive time-and-a-half wages when they work more than 40 hours in a week.
According to reports, the original salary threshold would exempt high-paid executives. Instead, it has denied overtime to employees at lower levels who may be working 50 to 70 hours each week. The rule is a clear sign of the Obama administration’s goal to increase the wages of the middle class.
In 1975, the percentage of workers who qualified for overtime was 62%. Today, it’s at 7%. This is a huge drop, and the new rule would increase the number to roughly 35%.
The administration expects some companies to reclassify some employees from salaried to hourly. This could impact the morale of the company. Other companies are expected to keep their employees as salary, but monitor the hours and pay. Others may increase the pay of some workers to the new threshold to avoid overtime pay.
This rule may affect small businesses who cannot afford to pay overtime or increase wages to reach the minimum threshold. They may request that their employees work no more than 40 hours a week and consider part-time employees to pick up the slack.
The original proposed threshold was $50,544, but due to more than 270,000 public comments received by the administration, it was lowered to $47,476. The new rule will take effect December 1, 2016.
To learn about your rights to overtime pay, or if you need to discuss a dispute over lost overtime wages, you should consider contacting our Houston overtime lawyers at Bailey Cowan Heckaman PLLC. We have the extensive experience necessary to help you determine if you are eligible for overtime and were denied pay. Individuals who work over the required period of time deserve to be compensated for their labor. If they are not, they may have the right to take legal action and seek out a claim for unpaid wages.