President Obama and the Department of Labor have officially made a new overtime rule that will change the way employers will be able to pay their employees. The Labor Department has not made a rule or increase like this since 2004. This new rule means a huge bump in income for millions of people, and will go into effect starting December 1st.
For years, your boss could claim you were a “manager” and get away with paying you meager wages, as well as forcing you to work ungodly hours. Retail “managers” in particular were getting the raw deal. Some retail managers were working 60+ hours a week and only making a salary of $30,000 or less because as a “manager” the employer didn’t have to pay overtime. The rule for over a decade was if a “manager” made at least $23,660 per year as a salary, the employer could benefit from not having to pay time and a half for each hour worked over 40 in any given week. This new rule boasts the minimum requirement to $47,456 or more.
What this new rule means is that if you make a lower middle class or in some places average or below salary of $47,456 or below, you will be entitled to receive time and a half pay for each hour you work over 40 in a given week.
There are few ways an employer may try to weasel out of abiding by this new rule. One way would be cutting or limiting your hours to the regular 40 hours per week maximum or less. An employer may use this new rule as a reason to cut employees to part time as to not have to provide health care or other benefits as well. Another way an employer might try to skate away from this new rule, depending on how much your salary is, would be to bump your salary up to the $47,476+ amount to avoid paying time and a half. If an employer did that, they could still classify you as a “manager” and you would still be subject to working 40+ hours a week as required; with no overtime pay. However, depending on your job duties, that may not apply either.
The other major changes in the rule include the following: for those who receive a bonus or commission, the employer can use up to 10% of those bonuses and commissions to satisfy the minimum salary of $47,476. An example would be if your annual salary is $40,000, but you receive two bonuses per year of $5000 each, your salary + bonus would equal $50,000, which is over the salary threshold, making you not eligible to receive overtime pay. Also included in the major changes of the rule, requires future automatic updates to the salary threshold to occur every three years beginning in 2020.
Because of the drastic change, it is recommended for employees who are classified as salaried, making under $47,456 to keep meticulous records of their time worked. For some who haven’t had to punch a time card, this could be a drastic change. However, in the end those records could mean the difference between winning and losing a pay dispute with the labor board over unpaid overtime wages.