May 18, 2016 – The U.S Department of Labor released the final updated overtime rules, which is signed by U.S President Barack Obama, and Labor Secretary Tom Perez. These updated rules sets to help workers on becoming eligible for overtime pay.
Work Extra and Get Paid Extra
The rule is the result of the Labor Department’s review of the Fair Labor Standards Act of 1938, which considers workers “eligible” for overtime pay if they are working more than 40 hours a week. The old framework of the rule states that the standard salary level for basis of exemption should be $23,600 a year. This finalized version of the rule is set to affect about 4.2 million of workers, especially white collar employees.
Ever since the overtime rule’s proposal, many business groups had already expressed their concerns regarding the rule’s finalization, saying that this would force business owners to slash hours of workers or even end up to businesses hiring lower wage workers, just for them to avoid these high amounts of overtime pays.
Overtime Rule Key Aspects
The new and improved overtime rules tends to double the threshold for salaries of white collar employees (admins, executives and professionals). Here are some of the key aspects of this updated overtime rules:
- Setting the standard salary level of full-time salaried workers by raising the exemption from $23,660 to $47,476 a year.
- Raising the minimum salary of HCE (Highly Compensated Employees from $100,000 to $134,004 per year.
- The rule also plans to establish a mechanism for automatically updating salary and compensation levels for exempt employees every three years.
December 1, 2016 is the official date of when these rules will be promulgated. Effectivity of the rules also carry out the approval of increases for standard salary level and Highly Compensated Employee’s minimum salaries.