More Employees Might Soon Be Eligible for Overtime Pay

More Employees Might Soon Be Eligible for Overtime Pay

The U.S. Department of Labor (“DOL”) proposed a new regulation earlier this month that would make approximately one million more American workers eligible to receive overtime pay. Overtime is typically calculated at time and one-half a worker’s regular rate of pay.

Currently, all hourly workers must be paid overtime if they work more than 40 hours per week. And while it is a common misconception that salaried employees cannot receive overtime, any employee with a salary below $455 per week ($23,660 annually) is also due overtime. These workers are legally classified as “non-exempt,” meaning they are not excluded from the parameters—and protections—of the Fair Labor Standards Act, 29 U.S. Code § 201 (“FLSA”), the law that sets the federal minimum wage and rules for overtime pay.

The DOL’s recent proposal would raise the salary threshold to $679 per week ($35,308 annually). For employees paid a salary above this level, whether they can receive overtime pay or not (i.e., whether they are “non-exempt” or “exempt”) will still be determined by their particular job duties. Generally, employees who are not making independent decisions about the overall functioning of a business are entitled to overtime pay, whereas managerial staff and higher-level employees directing such things as business strategy and planning are not. According to the DOL’s explanation, “most employees” in the U.S. should be paid overtime, but “bona fide executive, administrative, professional and outside sales employees,” as well as “certain computer and creative employees” are exempt from the FLSA, and thus not required to be paid overtime pay. There are several other exempt classes of workers that the FLSA specifies.

If this proposed regulation takes effect, the status of certain jobs—like police and fire personnel, paramedics, nurses, and various tradespeople—would be unaffected. Their FLSA status would not change, and they would see no modification in their overtime compensation.

This is not the first time a change to overtime pay regulations has been proposed. The Obama Administration attempted to double the salary threshold of overtime eligibility to $47,476, which was expected to take effect in 2016, and would have affected nearly 4.2 million people. That proposal was met with swift opposition from business interests and eventually hindered by a federal lawsuit.

The current DOL regulation is technically a proposal at this stage and has entered a 60-day public commenting period. While it may face some legal challenges, it is far more likely to become law than the Obama proposal, due to its less ambitious scope. If you would like to make a public comment on this proposed change, visit www.regulations.gov and enter the code “RIN 1235-AA20.” Public comments must be submitted within 60 days of being published in the Federal Register to be considered. Once on the comments page, you may sign up for email alerts related to the proposal.

For more information on this proposed change, you can find the DOL notice here: https://www.dol.gov/whd/overtime2019/index.htm

If you have concerns about how this proposed change might affect your business, The Prinz Law Firm can help. Contact us at 312.212.4450 or by going online at https://www.prinz-lawfirm.com/.

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