Obama’s New Overtime

Middle class workers, rejoice! An overhaul on overtime regulations is on the horizon with the Department of Labor now finalizing its recommendations for the amended overtime rules. The finalization is based on the previous 2014 Presidential Memorandum signed President Obama, which was then followed by the proper federal rulemaking procedures i.e. the Notice of Proposed Rulemaking in July, 2015 and a 60-day comment period elapsing this fall. Presently, under the current rules for overtime (last restructured in 2004) certain salaried workers cannot qualify for overtime work if they are making over $23,600 a year (a mere $455 a week). However, with the new rules the threshold will rise to $50,440. Meaning, over an estimated five million workers in the United States will now be able to receive overtime benefits (according to the Department of Labor and the Obama administration). Pew Research Center has conducted an analysis of the jobs most likely to benefit from the new overtime rule that allows these white-collar workers to become eligible for overtime. At the top of the list “First-line managers of retail sales workers,” with a staggering 325,783 estimated number of affected workers. Following this category: accountants and auditors, Managers (all other), First-line managers of office and administrative support workers, etc. See http://www.pewresearch.org/fact-tank/2015/08/24/proposal-could-make-nearly-5-million-workers-newly-eligible-for-overtime/. To exemplify this, take for instance a man named Rick. Rick is an employee of a local restaurant chain. Rick worked his way up the restaurant management food-chain, starting at as a dishwasher and is now a shift manager, in charge of 50 employees. Rick works hard to pay for his college loans, his mortgage, and to put clothes and food on the table for his wife and three children. Making $460 a week, a measly $23,920 a year, Rick needs to keep his job even if this means staying longer hours to fulfill his managerial responsibilities. Yet all those long hours do not amount to any extra overtime pay because Rick is considered an exempt employee under the current threshold. Therefore, Rick, like many middle class workers in the same situation, are stuck working long hours for wages that don’t provide nearly enough to support a decent lifestyle. With the threshold change now being raised to $50,440, a threshold that hasn’t been as high since 1975, those workers (like Rick) falling below this amount will now qualify for overtime pay. Employers can no longer exempt employees from overtime benefits that make over the $23, 600 threshold merely because these salaried workers are considered “management” or “administrative personnel.” But of course change does not come without backlash. Those in opposition, such as congressional Republicans and business groups, worry the potential side effects this proposal could prove to hurt the workforce more than help. These groups argue employers (especially small businesses) will now give less hours to avoid giving paid overtime to workers by spreading the work out in such a way to avoid employees from being non-exempt from overtime benefits. For example, hiring more part-time workers and cutting down the availability to earn managerial jobs might be a way for employers to avoid the extra costs. Keep in mind that the proposed rules are not official yet, meaning employers have time to reevaluate how to comply with these standards and should seek legal help in making sure they do. This drastic rule could potentially leave a lasting legacy for the Obama administration, whether that leaves distaste in employer’s mouths or not. For more on this, visit http://www.dol.gov/featured/overtime/# * This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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