What Do the New Overtime Regulations Mean for You?

For the first time in 12 years, the Department of Labor announced that the Final Rule for overtime regulations will extend coverage to approximately 4.2 million Americans who are currently exempt.

So what does this mean?  

Will everyone receive bigger paychecks and more leisure time? In some cases, this may be true, however you can't bank on it. Some employers see this new Rule as a “career killer” rather than helping to restore middle-class jobs - but at the end of the day, this rule was implemented to address one dilemma: employers need to regulate workers’ hours or practice fair pay.

So, what's going to change under the Final Rule?

Salary basis test - The Obama administration is going to double the current salary threshold from $23,660 to $47,476. So, if you earn a salary under $47,476 – you are now eligible for overtime pay (pending the duties test), but there are caveats to be aware of that could affect your paycheck (see below). 

Salary threshold will automatically increase – From now on, legislative changes will not be necessary to increase the salary threshold. The standard salary level requirement will automatically update every three years to keep pace with inflation.

The duties tests – Salary level isn’t the only criteria when considering your overtime status. Employees’ job duties play a role in exempting an employee from overtime pay and this is reflected by the duties test. At the moment, the Final Rule does not affect exemption rules for executive, administrative, professional, computer analysts, or sales workers – to get the full scoop on the guidelines for exempt employees, click here.

Before the Final Rule becomes effective on December 1, 2016, you can expect many more conversations to sprout – especially with the Presidential election ahead...

In addition to the outcome of the election, the efficacy of this Rule will be dependent on how business owners react to the change. Will they adhere to the policy and muster up the funds to cover overtime costs? Or will they look to balance out / cut costs by hiring more part-time employees, adjusting benefits packages, limiting work hours, or adjusting base pay? At this point, only time will tell.