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President Obama’s 2014 directive to update the overtime regulations

    June 9, 2016

    In response to President Obama’s 2014 directive to update the overtime regulations, the United State’s Department of Labor has made a significant rule change for employers with employees currently classed as exempt and who make below $47,476 annually.  The Department‘s new rule does the following, according to the Department of Labor:

    • Raises the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
    • Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
    • Strengthen overtime protections for salaried workers already entitled to overtime.
    • Provide greater clarity for workers and employers.

    According to the Department, employers will need to do one or more of the following to comply with the new rule:

    Pay time and a half for overtime work;

    Limit worker’s hours to 40 per week;

    Do a combination of the above

    The Department’s new rule goes into effect on December 1, 2016.  At that time, the minimum salary necessary to classify as exempt shall be $47,476 per year.  

     

    Employers should start to assess their current employees to determine who is and who is not exempt under the new rule starting December 1, 2016, and adjust accordingly.   This rule change could potentially impact many employees.  Failure to account for the new rule could expose an organization to considerable liability for unpaid wages.

     

    A link to more information about the Department’s new rule is provided:  ttps://www.dol.gov/featured/overtime/

     

    Brian A. Walker helps businesses and individuals in employment, business, and real estate related litigation and transactions from the Wenatchee office of Ogden Murphy Wallace PLLC. You can reach Brian at bwalker@omwlaw.com or at (509) 663-1954.