The new overtime laws: What do employers and employees need to look for?

The new overtime laws: What do employers and employees need to look for?

| Nov 9, 2016 | Fair Labor Standards Act |

Currently, any salaried employee who performs executive, administrative or professional duties who earns $455 or more a week, or $23,660 in a year, is not entitled to overtime pay for working more than 40 hours a week.

Things are about to change significantly. On December 1, overtime thresholds will more than double to $913 a week, or $47,476 a year.

Practically speaking, far more people will be eligible to receive overtime pay. In fact, the Department of Labor estimates more than 4.2 million workers will now be eligible to receive overtime pay. It is likely that thousands of businesses will be impacted as well. Given what is at stake, it is critical that both employees and employers know what to expect going forward.

How will employers comply with these regulations?

It is essential for employers have appropriate plans in place before these regulations become law. Specifically, employers with newly overtime-eligible employees must take some combination of the following steps:

  • Give employees raises so their salaries are above the overtime threshold. This may be the right approach for employees who already earn close to $47,476 annually. On the other hand, this may not be practicable for employees who earn far less than the new overtime threshold.
  • Convert salaried employees to hourly employees. The other alternative for employers is to change the pay structure for salaried employees who earn less than the overtime threshold. By changing an employee’s pay from salary to hourly, the employee will have to accurately account for his or her time, and the employer will be required to pay overtime when the employee works more than 40 hours in a week.

Whatever approach an employer takes, the fact is that employers will need to do something. Employers that refuse to pay overtime to employees who qualify are breaking the law, and could be required to pay their employees unpaid wages, as well as penalties, fines and interest.

What do employees need to do?

If you earn more than $23,660 and less than $47,476 and are not eligible for overtime now, you will be eligible for overtime starting December 1. If your employer has not taken appropriate measures to comply with the law, it is important to consider all of your options. For years, employees and employers across Maryland have relied on Thatcher Law Firm. Our attorneys provide dynamic, effective representation in all areas of employment law.

Sources: What You Need to Know About the New Overtime Rules, Fortune.com, October 31, 2016, U.S. Department of Labor, The Overtime Rule