Two years ago, President Barck Obama had directed the DOL to raise the salary level for these exemptions in order to bring more American workers within the protections of the law.
Under the old rule, any employee whose duties qualified them as either an “executive, administrative, or professional” employee and who received a salary of at least $455 per week ($23,660 annually) could be properly classified as overtime exempt.
Such an exempt employee would not have to be paid “time and a half” premium pay for any hours worked in excess of 40 per workweek.
When the new rule goes into effect on December 1, 2016, that salary cutoff level will more than double to $913 per week ($47,476 annually), and will be set to automatically update every three years thereafter so that it will keep pace with inflation in the future.
Overtime exempt employees currently receiving an annual salary in excess of $47,476 will not be affected by the change, nor will it affect hourly employees who already receive overtime premium pay for any hours over 40 per week.
Those who will be affected are salaried workers who are currently classified as exempt from overtime requirements who earn between $23,660 per year and the newly established level of $47,476 per year.
These people will either have their salaries increased to the new minimum level or will likely be reclassified as hourly workers and will begin “punching the clock” along with other hourly employees.
The DOL estimates that the new regulation will extend overtime coverage to 4.2 million American workers. However, it is unclear exactly how many will actually benefit from the rule, as employers may respond to the changes by reducing or eliminating overtime hours and hiring additional employees, including temporary workers, to spread extra work around.
Employers may also offset the costs of providing additional overtime pay by lowering wage rates and making cuts to certain employee benefits.
Meanwhile, congressional Republicans who oppose the revisions are mulling their options to prevent the regulation from taking effect, and are reportedly considering everything from issuing a nonbinding disapproval resolution, to threatening to effectively block the rule through the appropriations process.
However, in an election year when populist themes and the increasingly difficult plight of the American worker have taken center stage, this could be a battle that the GOP would rather not fight.
To learn more about other provisions of the rule and its potential impact, visit the DOL’s webpage dedicated to explaining the regulation at www.dol.gov.
Stephen D. Hans is an expert in the labor and employment law field. He can be reached at hansassociates.com.