The new overtime regulations for salaried workers take effect on Dec. 1. Is your dealership ready for the change? The new rule increases the salary threshold for paid overtime from less than $455 per week to $913 per week. Previously, salaried workers were only entitled to overtime pay if they made less than an annual salary of $23,660.
According to the Department of Justice, these new rules will extend new overtime protections to 4.2 million workers in the U.S. The Economic Policy Institute (EPI) has a much larger statistic, saying that these changes will impact 12.5 million Americans. This difference is a result of the Department of Labor not including employees who were misclassified by their employers in its count.
Cale Guthrie Weissman wrote in Fast Company that because earlier rules exempt “high-level” workers from overtime, and based this on what was called a “duty test.”
He goes on to say:
Many employers seized on this opportunity to change job descriptions to make it seem as if lower-level employees were performing more expert tasks, thus exempting them from overtime. This new rule makes things much clearer: If a worker makes less than $47,476, they are eligible for extra compensation if they work more than 40 hours a week, regardless of their job title or description. The EPI estimates that there are more than 8 million people who will now be more easily classified as eligible for the extra compensation, since they were considered exempt before due to their job descriptions.Employers have a variety of ways to comply: They can raise these workers’ salaries to make them exempt from the overtime threshold, pay the mandated time-and-a-half overtime for those who do work more, or simply make sure employees aren’t working overtime.
The overtime rule has not been changed since 2004, meaning employee wages fell behind as the economy changed and the price of living rose.
These new rules will give workers in numerous demographics a significant pay boost. According to the Department of Labor’s numbers, 2.3 million women will be eligible for these new protections, compared to 1.9 million men. Additionally, a little less than 2 million workers who have not earned college degrees will also be affected.
Weissman writes that the change has not been well received by the business community. He cites a Washington Post article that says many employers will be forced to switch some employees from salaried to hourly in order to comply with the changes. And, the National Retail Federation has claimed the new regulation is a “career killer.”
You can read the full article here.