The Department of Labor announced changes to the federal Fair Labor Standards Act (the “final rule”) in May, which will officially go into effect on December 1, 2016. One of the most significant changes to the current overtime rules is that the final rule increases the salary level needed to qualify for an overtime exemption. In the meantime, employers and employees throughout the country are bracing for the impact of the final rule and learning how it may affect them. At Donati Law, PLLC, our Memphis employment law attorneys want local workers to have the information they need to better understand the final rule and their right to overtime pay.
Here are a few key points about the new overtime rules:
- Currently, the salary threshold for non-exempt employees is $23,660 annually. As of December 1, 2016, employees who earn less than $47,476 annually (less than $913 per week) will qualify for time and a half overtime pay. To qualify for an exemption, you must earn more than $47,476, however, you may still be eligible for overtime.
- The U.S. Labor Department expects the new rules to impact over 4 million workers nationwide in the first year. Although workers from various industries will become non-exempt employees eligible for overtime, the largest impact will be felt by Managers and Assistant Managers in retail and service operations.
- This salary level will automatically increase every 3 years, beginning January 1, 2020.
While there is no change to the FLSA’s current salary basis or duties test, many employees who currently do not receive overtime compensation will become eligible for overtime. It is important to note that even if you earn more than $47, 476 annually, you may still be eligible for overtime pay.
Employers may react to the rule by implementing some of the following changes:
- Small pay bumps for employees whose salaries are just below the new threshold. Employees who receive a pay increase as a result of the final rule may still be eligible for overtime.
- Less or no overtime scheduled by employers who want to manage labor costs.
- Switch from salary to hourly pay.
- Employers granting overtime pay for workers who don’t meet the new salary threshold. Employees who did not previously receive any overtime compensation prior to December 1, 2016 may be entitled to past overtime.
- Reclassification to “non-exempt.” Employees who are reclassified by their employers from exempt to non-exempt may be owed past overtime compensation.
It is important for employees to know that even if their pay is increased, they still may be eligible for overtime pay. To qualify as exempt from overtime under the FLSA, your method of compensation and job duties must meet one of the FLSA’s exemptions.
Donati Law, PLLC has years of experience protecting the rights of employees in a range of employment law matters, including wage and hour violations. If you have questions about whether you are entitled to overtime pay or how the final rule will impact your pay, please contact us to discuss your case.