Demystifying the Most Common Parts of New Overtime Pay Rules

July 20, 2016
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Understanding the New Overtime Pay Rules

One of the issues with the new overtime pay rules regarding wage and hour regulations is companies are unaware of the major changes of the proposal, which is set to go into effect Dec. 1.

According to the Department of Labor, a prime example of the changes for salaried employees is for personnel who earn under $47,476 annually. These employees are set to earn a substantial raise for overtime pay from $455 to $913 per week. That will equate to a spike in salary $23,660 to $47,476 per year. 

Specifically, the regulations will target the salaries of “executive, administrative, professional and computer employees.” The DOL also said “unless covered by an exemption, employees covered by the Fair Labor Standards Act must receive overtime pay for all hours worked over 40 in a workweek at a rate not less than one and one-half times their regular rate of pay.”

This has been difficult for companies to determine what is coming under the FLSA. The regulations are confusing, but listed below are some clarifications on what many companies need to consider in terms of overtime eligibility and employee exemptions.

The most common employees affected by new overtime pay rules

This is where it gets tricky. The employees most impacted by the new rules will typically be women as well as college-educated people between ages 25 and 34. That will affect roughly 4.2 million workers. Of those employees, 55.6 percent will be women, and 39.2 percent will have a Bachelor’s degree, according to Oregon Live. 

Exempt from exemptions?

This can be confusing because there will be certain employees in situations where they will be exempt from the exemption even if they seemingly qualify as nonexempt under the new rules. A prime example of these types of employees that are exceptions to the exemptions include teachers, doctors and lawyers.

To know how these rules specifically impact a company, a firm will first need to know how the business should be classified. This is part of what the rule is designed to correct because many companies have previously misclassified their employees, which resulted in lower or higher overtimes wages.

The new overtime rules target job titles, but classification is for job duties. So regardless of the job title, an employee may be exempt by duties, however, his role may change what they are.