Will the New Overtime Law Affect You and Your Employer?

Working more time than usual is something that benefits both employees and employers. When an employee is willing to fill in for co-workers that need to miss time, or he or she stays late or comes in early to do extra work, things run smoothly and the company benefits. And because of laws that have been in place since the 1930s, the employee willing to work extra hours is guaranteed to be paid for that work.

Unfortunately, those laws are not fool-proof. There are instances in which employees are not eligible for overtime pay, even if they work more than 40 hours per week. Those instances could soon be fewer thanks to a law proposed recently designed to modernize the system and increase the salary threshold, making more people eligible for overtime pay.

The salary threshold as of now is $23,660 annually or $455 per week. If an exempt employee earns more than this amount he or she might not be eligible for overtime pay. Some employers even used this number as a loophole to avoid paying overtime wages by setting the salary of an employee at just above $23,660.

Another problem with the current law is that $23,660 is worth much less than it was when the law was created – 40% less. Many believe that nowadays that threshold is just too low to offer adequate protection to employees. For more information about current overtime laws, visit the United States Department of Labor website.

Employee advocates in favor of changing the law are encouraging a threshold raise and the tying of the threshold to inflation rates, so it would continue to rise as necessary. The newly proposed threshold is $50,440 per year or $970 per week, which would automatically update based on wage growth over time. The updated law is expected to affect nearly five million American workers.

Some are Against the Law – and Not Only Employers

Not everyone is happy with the proposal and they are not all employers that will be footing the bill. Some employees have spoken out against the change because it will cost them flexibility. Employees in situations where they are not required to punch time clocks will now be forced to carefully track their hours. Employers will insist these previously exempt employees work 40 hours per week or less. For instance, if a store manager balances his or her work schedule with non-work duties, sometimes putting in more than 40 hours to ensure his or her work obligations are still met even with personal responsibilities, their flexibility will vanish.

Ironically, flexibility is something advocates of the new threshold claim employers will continue to have. To avoid an unmanageable increase in payroll expenses, employers could hire more part-time workers, boost someone’s salary just above the threshold, or increase a part-time employee’s hours to full-time. All of these solutions avoid overtime pay, but still ensure everyone is treated fairly and rewarded for a hard day of work. Overworked employees will lose the work they are currently not being paid more to do and others will receive greater opportunities to earn and grow with their employer.

Will you be affected by the increase in the threshold? Are you working for a company that is doing all it can to avoid paying overtime to employees?

If you believe your employer might be going too far and not paying for work that legally requires overtime pay, you can take action. Contact Borrelli & Associates, P.L.L.C. to schedule a consultation.