4.2 Million More Workers Eligible for Overtime Under New Federal Rule

New overtime rules would require employers, including local governments, to provide overtime pay to more employees, or make other changes to their compensation.

As reported by the Washington Post, the Obama administration unveils a new rule today that would make millions of middle-income workers eligible for overtime pay.

The rule includes the public sector, meaning that full-time salaried employees of county government earning between $23,660 and $47,476 per year will become eligible for additional overtime pay.

As described by the Post,

About 35 percent of full-time salaried employees will be eligible for time and a half when they work extra hours under the new rule, up significantly from the 7 percent who qualify under the current threshold. . .

Screenshot 2016-05-18 09.41.39
Click for a video from the Department of Labor, in which Secretary Tom Perez explains changes to overtime pay under the new rule.

The Department of Labor states,

The final rule will:

  • Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
  • Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
  • Strengthen overtime protections for salaried workers already entitled to overtime.
  • Provide greater clarity for workers and employers.

The final rule will become effective on December 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.

This spring, J. Larry Stine, Senior Principal with the Atlanta-based firm Wimberly, Lawson, Steckel, Schneider & Stine P.C. addressed the Conference of Southern County Associations on the topic of the new federal rule, with a presentation entitled, “How About a Raise? The DOL Salary Threshold Increase and its Implications for Public Sector Employees.”

On the Thompson Reuters Legal Solutions blog, Stine writes,

The impact of a change to the salary threshold will be dramatic.

Stine raises attendant concerns regarding the regulation, stating

The proposed salary level increase will raise other management issues as well.  It will be necessary to maintain records of hours worked for more employees, and some with managerial responsibilities may chafe at being required to clock in and out.  And overtime can be hard to control.  For example, a nonexempt employee who checks his or her work e-mail outside of normal working hours may be due overtime for that activity.  It is nearly impossible to prevent an employee possessing a smart phone from checking work e-mail without locking them out of the system after hours.  The change also may affect employee eligibility for benefits such as health insurance, since many employers provide more or better benefits to salaried, exempt workers than they do to nonexempt, hourly employees.

For more information, see Millions more workers would be eligible for overtime pay under new federal rule from the Washington Post, The Overtime Rule from the Department of Labor, Employers Need to Prepare For The Increase to the Salary Threshold for Exemptions to Overtime from the Thompson Reuters Legal Solutions Blog, and New Labor Rule Could Extend Overtime Protections to 5 Million US Workers from Conduit Street.

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