An important new overtime rule is being proposed that could change overtime for the better. With unemployment at an all-time low, this change could affect at least one million workers.
Overtime is determined by the Fair Labor Standards Act (FLSA). If an employer allows for overtime work, then overtime pay must be paid to employees. Overtime pay is typically one and a half times the hourly rate. Overtime is considered traditionally as any time worked over 40 hours in a work week. Employees are classified as either exempt (also called salaried, meaning no overtime eligibility) or unexempt (allowing for overtime).
This is determined by whether you earn a salary or wage at or above a certain threshold. Currently, the exempt threshold is $23,660 annually. If you make below that amount, you are eligible for and required to be paid overtime if it is worked. Many employers restrict positions from working overtime in order to avoid paying it so this new law won’t change much for them. For more specific details about the rules, see this cheatsheet.
The overtime rule proposal, which has been published and taking comments since 2016, would increase the overtime threshold to $35,308 per year. This would make as many as 1 million more workers potentially eligible for overtime under the law. The overtime law is an important one to protect worker’s rights and prevent abusive work practices by employers. The last change was made in 2004. Another proposed change is for periodic reviews of the overtime law. It’s important to note there is no change for firefights, police, paramedics, and nurses as well as some other unionized workers like carpenters and electricians.
The classification of ‘highly compensated’ employees would change from $100,000 to $147,414.
The new rule, if it becomes law, will require more employees to be paid overtime. This is especially important for those employees who are required to work on holidays. Currently, law makers are working to finalize the rule for approval.