The Overtime is Coming!

The overtime threshold is changing, and the changes could greatly impact some employers. According to the White House Domestic Policy Council, only 8% of full time salaried workers are currently being paid overtime. That’s because the rules that determine which workers are exempt from overtime pay haven’t kept up with the cost of living. Some professionals and managers are exempt from overtime if they make more than $23,660 a year and perform specific duties. However, this is about to change.

President Obama has directed the Department of Labor to update the regulations concerning who qualifies for overtime pay. If the proposed changes to the overtime rules are adopted, the salary threshold is projected to be about $50,440 at the time of implementation. That’s more than double what it currently is. Additionally, for the first time ever, the salary threshold will be tied to a mechanism that automatically updates the salary and compensation thresholds on an annual basis, so the overtime cutoff can keep pace with inflation.

Although the final text of the rules and their implementation date is not yet known, the new rules are expected to be issued this summer. The U.S. Department of Labor sent its final set of overtime rules to the Office of Management and Budget in March of this year. The OMB has thirty to ninety days to review the rules, after which they will be published. Once the rules are published, employers will only have sixty days to comply with changes.

It is very important that employers now about this now and can start working to ensure that they will be in compliance with these overtime changes.