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New overtime thresholds will dramatically impact employees and employers

In the coming weeks and months, the U.S. Labor Department is going to release new salary thresholds under the Fair Labor Standards Act (FLSA). These thresholds will potentially impact millions of American workers. Currently, salaried employees performing executive, administrative or professional duties are not eligible to receive overtime if they earn more than $23,600 a year. Under these proposed new rules, the overtime threshold will increase to $50,440 a year. Consequently, workers in many fields who earn less than this amount will be eligible for overtime when they work more than 40 hours in a week.

Once this rule is enacted, it is likely employers will have 30 to 60 days to comply. Labor experts believe the new rule will go into effect sometime between September and November.

What are the practical implications of these regulations?

For salaried employees who currently make less than $50,440 a year, employers are likely to take different steps to become compliant with the law. For employees who already earn salaries close to the new threshold, employers could raise their salaries to meet the overtime threshold.

In many cases, employers will reclassify formerly salaried employees to hourly. As a result, hourly workers will now be required to track all of their working hours to account for overtime. While this will impact many employees, it could have a disproportionate impact on telecommuters and employees with flexible work schedules. For instance, employees who are eligible for overtime who briefly check their work email at nights and weekends must keep track of their time in order to ensure that they are paid properly and that their employer is complying with the law.

Employees who have reason to believe that they are not being paid proper amounts of overtime should consider discussing their issues with an experienced employment attorney. Employers who want to make certain they are complying with these regulations should also consult with a knowledgeable employment lawyer. For decades, Thatcher Law Firm has provided intelligent, client-focused counsel to employers and employees across Maryland and beyond.

Sources: Are the new overtime rules about to boost your paycheck?, Alison Green, U.S. News & World Report, May 9, 2016. Short period to comply likely for expected rule on overtime, Michael Baer, Bloomberg BNA, April 16, 2016

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