Overtime Pay Eligibility Expands

Overtime Pay Eligibility

Overtime Pay Eligibility Expands

The Wage and Hour division of the U.S. Department of Labor is proposing to update the regulations defining and delimiting the exemptions for “white collar” employees; therefore, expanding the overtime pay eligibility threshold. Under the proposed ruling, the White House aims to strengthen the middle class and tackle income inequality. Updating the salary level of executive, administrative and professional employees (white collar workers) required for exemption will ensure the Fair Labor Standards Act’s, or FLSA’s intended overtime protections are fully implemented.

What is the new threshold and how does it affect me?

The agency primarily focuses on updating the overtime pay eligibility, setting the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers. The current threshold of $455 per week will increase to $921 per week, or $47,892 annually, and will extend overtime protection to about five million workers. According to President Barak Obama, “…too many Americans are working long days for less pay than they deserve,” Mr. Obama wrote in an op-ed published in the Huffington Post. Since the salary level has rarely been updated in recent decades, the new proposal will tie the salary level either to wage growth or inflation, ensuring the threshold’s buying power does not fade in time.

Under the current rule last updated in 2004, workers who are paid either hourly or earn a salary of less than the threshold ($455 per week) are generally eligible for overtime pay, while those with salaries of at least that amount who work in white-collar jobs generally are not.

Under the new ruling, extending the overtime pay eligibility will help address “the erosion of long-standing rules that have left millions working overtime without added compensation.” 

Table: Ratios of Salary Test Levels to Full-Time Minimum Wage Earnings

Year  Minimum Wage (MW) MW Earnings for a 40-Hour Workweek Exempt Short Test Salary Level Ratio of Short Salary Test to MW Earnings 
1949 $0.40 $16 $100 6.25
1958 $1.00 $40 $125 3.13
1963 $1.25 $50 $150 3.00
1970 $1.60 $64 $200 3.13
1975 $2.10 $84 $250 2.98
Year  Minimum Wage (MW) MW Earnings for a 40-Hour Workweek Exempt Short Test Salary Level Ratio of Short Salary Test to MW Earnings 
2004 $5.15 $206 $455 2.21
2015 $7.25 $290 $921 3.18
                                           (propsed)

“Therefore, the Department believes that the proposed salary level is appropriate in comparison with prior minimum wage ratios.”

Work overtime without compensation? Call 1-800-380-8080 TODAY!

Have your days been filled with long work hours? Did you not receive the compensation you deserve? Don’t allow your employer to circumvent the rules to control costs. If you are a salaried worker who became eligible for overtime pay, or were scaled back to an hourly position limited to 40 hours a week, call 1-800-380-8080 for a FREE LEGAL CONSULTATION! Get connected with an experienced workers’ compensation lawyer to file your wage and hour claim and obtain the justice and wages you deserve with no out of pocket costs to you. Either you get paid, or you don’t pay at all™.

 

Sources:

  1. Wage and Hour Division, Department of Labor. “Proposed rule and request for comments.” Retrieved July 20, 2015. PDF.
  1. Melanie Trottman and Eric Morath. “Overtime Eligibility to Be Expanded.” The Wall Street Journal. June 29, 2015. Print.

 

For Further Reading:

  1. A Hard Day’s Work Deserves a Fair Day’s Pay.Huffington Post.