According to the statistics, there are more than 4 million employees out there who have previously been unable to receive overtime pay because they were considered exempt under the FLSA. That has now changed. As of December 1, 2016, many employees who were exempt will now be on the receiving end of the FLSA overtime pay requirements. Here is what you need to know.
It's about time for a change
It's to be expected that employers are less than thrilled by this news. It's no secret that some businesses have benefited for decades from the old overtime rules. Now, with these new rules that will provide overtime to 4 million new workers, employers will no doubt seek to avoid providing this new compensation in any way they can. Issues related to wage and overtime are confusing to many employees and employers rely on that fact, assuming many workers are not aware of their rights under the FLSA.
The provisions of the Final Rule
The new overtime rule increases the threshold salary for overtime. What that means is, many salaried employees who were exempt from overtime will now be eligible. Currently, an employer is only required to pay overtime to salaried employees who make less than $23,660 a year. With the rule change, that threshold salary amount has doubled. So, anyone who makes less than $47,476 a year will be eligible to receive overtime pay, as of December 1, 2016.
What should employees look out for now?
What employers are likely to do now, in the face of millions of employees being able to earn overtime pay, is increase the salaries of exempt employees to an amount over the $47,476 threshold. While these people may bring home more money than before the rule change, they will not be eligible to collect overtime if they work more than 40 hours in a week. Another tactic may be to cut hours for exempt employees to make sure they do not earn overtime. This could mean that employers will put more stress on employees to be more productive in the time they have to work.
Beware of new reclassifications
Another step employers may take to avoid exempt status for some employees is to reclassify employees as hourly or non-exempt, which could result in the loss of many benefits, like paid vacation time. However, these types of reclassifications may be violations of the FLSA. Employee classification is not simply a matter of how an employer chooses to categorize an employee. The FLSA establishes who may and may not be exempt from overtime.
Issues related to wages and overtime can be difficult to understand. If you feel you have been denied proper compensation, or if you have any questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880.