New Overtime Rules -- Update
As of yesterday, November 22, 2016, a federal judge has issued a nationwide preliminary injunction banning the US Department of Labor from enforcing the new overtime rules that I wrote about below back in May 2016. I cover the judge's decision in more detail here.
In the meantime, click here for continuing updates on overtime, and seek legal counsel on the current status of the law. Employment law is always evolving!
[In May 2016], the Obama Administration's Department of Labor (USDOL) announced an update to the regulations governing overtime specific to executive, administrative and professional workers. It is significant and will impact many workers and businesses.
What should you know?
In a nutshell: if you work more than 40 hours a week, you must be paid 1.5 times your hourly rate (“overtime”) for any work over 40 EXCEPT.....
Understanding the exceptions are the key here, and they can be complicated to figure out.
Under federal law – the Fair Labor Standards Act (FLSA) – the exception for executive, administrative and professional employees have two parts – the “salary basis test” and the “primary [job] duties test.” You have to know 1) how much the employee makes, and 2) what the employee's primary duties are. (Job title alone doesn't cut it.) The new rules change the salary basis test (how much the person can make to still qualify for overtime), but don't touch the primary duties test.
New OT Regulations
Under the new federal rules, after December 1, 2016, if you make over $913 per week (or $47,476 per year), you will not be initially excluded from entitlement to overtime under the salary basis test. This figure used to be $455 per week, or $23,660 per year. Thus, after December 1, 2016, a lot more people -- those in the gap between $23,660 per year and $47,476 per year, who also meet the primary duties test and work overtime -- will be entitled to overtime pay under the salary basis test. USDOL suggests it totals 4.2 million nation-wide and 84,000 in Massachusetts.
If you are one of the Massachusetts employees or employers who may be subject to this change in the overtime rules, it is likely in your best interest to have your pay records audited for compliance. Employers who do this ahead of the December 1, 2016 deadline can ensure that they are complying with the law and making all business related adjustments for as seamless a transition as possible. It is best to do this prospectively so as to be able to plan as opposed to retrospectively, where, among others things, a business could be subject to triple damages or class actions.
Employees who believe they are in this gap between $23,660 per year and $47,476 per year and work overtime, may also want to know what they are entitled to.
Contact me to discuss an audit.