House Seeks to Delay New Overtime Rule
September 28, 2016
In May 2016, the Dept. of Labor issued a new rule raising the minimum annual salary, for purposes of the white collar overtime exemptions, from $23,660.00 to $47,476.00. The effective date of the new rule is December 1, 2016. However, the U.S. House of Representatives has approved a bill to delay implementation of the rule for six (6) months. If the bill passes the Senate, it will more than likely be met with a veto from President Obama.
Subject to various exemptions, U.S. workers are generally entitled to be paid at least the current federal minimum wage for all hours worked as well as 1 1/2 times their regular hourly rate for each hour worked over 40 in a workweek. Currently, if an individual is paid a regular weekly salary of at least $455.00 and her position otherwise satisfies the “job duties” test of the applicable exemption, she is not entitled to overtime compensation. This minimum salary was last adjusted in 2004.
In addition to the proposed legislation, the Dept. of Labor faces a lawsuit from 21 states challenging the new rule. Those states include Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.
Absent enactment of the proposed legislation or an injunction precluding implementation of the new overtime rule, employers must be sure their pay practices are in line with the rule by December 1, 2016. In addition, exempt employees currently earning less than $47,476.00 per year should educate themselves on their potential entitlement to overtime pay if their salaries are not adjusted to meet or exceed the new threshold.