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Overtime Pay Reforms – What You Need to Know
President Obama wants to change the way workers across the country are paid for overtime hours. If his reforms are enacted as expected next year, millions of people who are salaried would suddenly become eligible for time-and-a-half pay for all hours over 40 they work each week. Here are a couple of important aspects to these potential reforms we believe everyone should know.
Reasons for the Push
One of the biggest reasons President Obama is making overtime reform one of his main priorities is that there are millions of salaried employees who work 70 hours a week, but under the current law only have to be paid as little as $455 per week/$23,660 per year. Although such a person would actually be making less than the federal hourly minimum wage rate, the minimum wage law would not apply to them if they meet the current, but outdated, exemption standards from overtime pay and minimum hourly wage rates. In fact, the more hours they work, the less they are effectively paid per hour worked. The President and many economists see this as nothing more than exploitation of workers.
For example, say a person is working at a grocery store and is classified as an assistant store manager at a salary of $28,000 per year. Even though he or she spends a large portion of the day performing tasks that would normally be the responsibility of an hourly employee, such as stocking shelves, sweeping floors, cleaning aisles, etc., if they do a minor amount of management duties, then they may be exempt from overtime pay and minimum wage pay under current standards. Whether that assistant manager works 80 hours a week or 40, he or she will make the same amount of money.
How Will the Overtime Threshold Change?
Under President Obama’s plan, the threshold for workers exempt from overtime requirements will rise from $23,660 to $50,440. The change is expected to affect approximately 5 million workers.
Someone making more than $50,440 may still be eligible for overtime pay but it will depend on their corresponding job duties. For instance, if you supervise a certain number of workers, you can hire or fire employees, you would likely not be entitled to overtime pay so long as you are paid a salary of $970 per week/$50,440 per year. However, if you are paid $970 per week/$50,440 per year, but work primarily doing manual labor, such as work in the oilfield or in factories, then you would likely still be due overtime pay.
For millions and millions of people, overtime has become an almost ancient relic. If President Obama’s reforms come to pass, many workers will either make substantially more money or will have more time to spend with their families or pursuing leisure activities.
Fighting for Employees’ Rights
Even though we applaud these potential reforms, until then there will continue to be far too many examples of employers violating overtime laws by misclassifying workers and taking other actions that infringe on workers’ rights.
A lot of people may not think it would be worth it to file a lawsuit against their employer, but overtime pay can add up to a great deal of money – especially if you have routinely been working in excess of 40 hours a week for years and not being properly paid for it. The law states that employers found in violation of the federal Fair Labor Standards Act (FLSA) could be required to pay double the amount of back overtime wages that are owed. In addition, if a lawsuit is successful, the employer is typically required to pay reasonable attorney’s fees and costs.