New and revised overtime eligibility rules were proposed yesterday by President Obama. The revised rules would raise the minimum threshold for a salaried worker to be exempt from overtime from its present level of $23,660 per year, which is equivalent to about $11.38 per hour based on a 40 hour work week, to $50,440 per year, which is equivalent to about $25.22 per hour based on a 40 hour workweek.
The new overtime rules, which will not take effect until next year, would affect one of the three factors that determines whether an employee paid a salary is or is not exempt from overtime pay requirements. Those three factors at present are as follows: (1) the employee is paid on a salary basis, which basically means that their weekly pay is not reduced because of lack of work; (2) they work in a job whose duties cause it to fall with in one of the job classes that are exempt from overtime pay requirements; and, (3) the salary they are paid is at least $455 per week, which equates on an annualized basis to $23,660. The proposed new rule would affect this third factor and would raise the minimum salary level for an overtime exemption to apply to employee.
You can get more information on overtime rules: Does being paid a salary mean that I don't have to be paid overtime? Does a job title determine whether an employee is exempt from overtime pay requirements?
As I have discussed on the Kentucky Employment Law Blog, So Why Did Overtime Disappear?, in 1975 65% of salaried workers in the United States were paid overtime but only 11% were in 2013. The main reason is that the minimum salary threshold has remained so low. This would seem an excellent example of the power of corporate lobbying and corporate PAC money in our legislatures and elections.The new proposed threshold would go a long way toward restoring the overtime rules to what they were in the 1970s but still falls short.
There is substantial reporting on the new overtime rules by the New York Times,Obama Making Millions More Americans Eligible for Overtime, the Washington Post, Obama Plans to Extend Overtime to More Salaried Workers, at Politico.com, President Obama Overtime Rule Could Raise Wages for 5 Million.
Lexington, Kentucky overtime lawyer Robert Abell helps individuals and employees collect the wages and overtime they have earned but not been paid; contact him at 859-254-7076.