In his 2015 state of the Union Address, President Obama said employees should be paid for the overtime they work. He then instructed the Department of Labor (DOL) to review and amend the overtime rules.
On June 30, the DOL proposed significant changes to the federal overtime rules that exist today. Today overtime pay is paid at one and one-half an employee’s usual pay for hours worked over 40 hours/week. Employees are ineligible for overtime if they meet a three-part “white collar” test.
- Be paid a fixed salary
- Be paid above a specific salary threshold (currently $23,660/year)
- Perform primarily administrative, executive or professional duties, as defined by the DOL
Under the DOL proposal, the salary threshold for the white collar exemption would increase to $50,440 per year. If the proposed rule is approved and finalized, the DOL estimates that nearly 5 million additional workers will become eligible for overtime pay.
There’s a 60 day comment period for businesses and interested parties to provide feedback and the proposal has immediately triggered criticism from some industry groups such as the National Retail Federation and the National Restaurant Association.
We’ll keep you posted as this topic is sure to receive more attention in the coming months.