On May 18, 2016, the U.S. Department of Labor announced a major change to the law governing overtime pay. Here’s what you need to know.
What is the new overtime pay law?
The new overtime pay law significantly increases the number of people who qualify for time-and-a-half pay for any hours they work beyond 40 in a week. Under the new law, salaried employees making less than $47,476 a year must be paid overtime. (Almost all hourly employees, regardless of their wage, are already entitled to overtime pay.) This new protection applies to almost anyone making less than $47,476, including salaried managers or professionals.
When does the new overtime pay law go into effect?
The new overtime pay law will go into effect on December 1, 2016.
Does the new overtime pay law apply to me?
The new overtime law makes it easier to figure out whether you’re eligible for overtime pay. Under the new law, almost anyone making less than $47,476 per year is eligible—regardless of title, job description, or managerial status.
The main exceptions are those who aren’t covered by the Fair Labor Standards Act (FLSA), the federal law that sets overtime rules and other labor standards like the minimum wage.
- If your company makes at least $500,000 in annual sales, or your organization has customers in multiple states, you are probably covered by the new overtime law (assuming you make less than $47,476 per year).
- If you work at a business that does not meet either of these criteria—for example, most nonprofits doing charitable work—or you work in one of a few excluded occupations, then you may not be covered by the new law, regardless of how much you make. The Department of Labor has details on who is covered by the FLSA.
- If you make $47,476 or above, you may still qualify for overtime if you are paid by the hour or if your job duties are not those of a bona fide professional, executive, or administrator, as defined by the Department of Labor.
Do you know someone who might be affected by the new overtime pay law?
Does the new overtime pay law affect managerial and salaried employees?
Yes. The changes in the new overtime law are specifically intended to protect people who are paid a weekly, biweekly, monthly, or annual salary. Now, anyone making less than $47,476, regardless of whether they are salaried or hourly, is guaranteed overtime pay if they are covered by the FLSA.
Why was the threshold set at $47,476? Will it be raised again?
The Department of Labor set the overtime salary threshold at $47,476 to be equal to the 40th-percentile salary for workers in the lowest-wage Census Region, currently the South. The threshold will be raised every three years to maintain its effectiveness.
How will the new overtime pay law affect me at work?
If you qualify for overtime pay under the new law and don’t already receive it, your employer has three principal options:
- Pay you time-and-a-half for all hours worked beyond 40 each week
- Scale back your hours to just 40 per week and still pay you the same salary
- Give you a raise to $47,476 or above so you can continue working more than 40 hours per week without overtime pay
Here’s an easy way to explain the new overtime rules to your coworkers or managers:
The Department of Labor just updated the rules determining who is guaranteed overtime pay when they work more than 40 hours per week, and I think this affects our company. The new rules go into effect on December 1, 2016, and require that most people—including salaried employees—making under $47,476 a year be paid time-and-a-half when they work over 40 hours in a week. This means that to comply with the new rule, employees making less than $47,476 must be paid for overtime work or limit their workweek to 40 hours. The Department of Labor has resources on how to comply with the new rule.
I think I now qualify for overtime pay. Do I need to do anything?
Hopefully not. If you work at a large organization, it’s likely that the human resources department will know about the new overtime law and will have a plan to legally comply. The Department of Labor will provide resources and information to employers explaining how to comply with the new overtime rules. It’s up to your employer to follow the new rule, or they risk an investigation by the Department of Labor.
Help! I think the new overtime pay law affects me, but I don’t think my boss knows about it yet.
If you think the new overtime law will affect your workplace, and you don’t think your boss has a plan to comply, here are a few things you can do:
- Ask your organization’s human resources department if it has a plan.
- Ask your coworkers if they know about the new rule.
- Tell your boss that you think you qualify for overtime under the new law.
- If your employer refuses to comply, you should contact the Department of Labor or an attorney.