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Federal Government Creates New Overtime Rules to Take Effect Later This Year

Obama signs billGeorgia employers and employees will soon be operating by a new set of rules when it comes to overtime pay for certain salaried employees. On May 18, the White House and the US Department of Labor announced new rules that will greatly expand the range of salaried employees who qualify to receive overtime. The new rules more than double the salary cap for eligible employees and, according to the White House, make an additional 4.2 million workers eligible for overtime. The White House also expects the new rules to increase earnings by roughly $12 billion over the next decade.

The rules governing salaried employees’ eligibility for overtime contain within them a maximum salary above which salaried workers cannot receive overtime pay. Prior to the adoption of the new rules, the salary cap was $23,660. The new rules hike that eligibility maximum to $47,476. These new rules arose from a 2014 Presidential Memorandum in which President Obama directed the Labor Department to update the regulations related to who is covered by the Fair Labor Standards Act’s overtime provisions. This was done in order to further “the President’s goal of ensuring workers are paid a fair day’s pay for a hard day’s work.”

The government arrived at the $47,476 figure by choosing an amount that reflected the 40th percentile of earnings among full-time salaried workers in the lowest-earning region, which happened to be the South. Here in the South, an employee in the 40th percentile earned $913 per week, or $47,476 annually. The rule also creates a system by which this eligibility salary cap figure will update every three years so that the cap figure will “continue to provide useful and effective tests for exemption.”

According to the New York Times, opponents of the changes contend that the new rules will hurt worker morale. The Labor Department scoffed at this objection, arguing that:  “You know what’s bad for morale? Working 50, 60 or even 70 hours a week without additional pay. This rule will fix that, and the extra pay will help workers pay their bills, or even take a vacation.”

The new regulations take effect on December 1. They will very likely require a new degree of oversight and diligent record-keeping on the part of employers. In the past, many employers may not have maintained any sort of tracking of the hours their salaried employees worked. As long as an employee made a salary in excess of $23,660 and did not present any punctuality issues, many employers may not have felt a need to record the actual number of hours those employees put in. This new rule will change that in a lot of situations.

The new rules may also trigger an increase in FLSA lawsuits, since some employers may be slow to adjust to the new standards. In 2015, workers filed almost 8,200 overtime lawsuits, which were twice as many cases as were filed in 2005. According to a fortune.com report, the change in the rules could raise the number of cases to more than 9,000 this year. The law gives employees three years to initiate a legal action to recover unpaid wages, including unpaid overtime.

With any aspect of employment law, whether you’re an employer or an employee, it is very important to make sure that you are educated about all the laws and regulations affecting your business, and how changes to those laws and regulations could affect you. A change to the rules may mean a new exposure to liability or a new right to recover as a result of noncompliance with the law. For excellent and up-to-date advice and advocacy, talk to the experienced Georgia overtime attorneys at Mays & Kerr. Our attorneys have the experience and current knowledge you need to aid you with your employment law issues.

To speak with one of our lawyers about your case, call 1-877-986-5529.

More blog posts:

Differentiating Between Interns and Employees Under the Fair Labor Standards Act in Georgia, Atlanta Employment Attorneys Blog, Sept. 30, 2015

6th Cir.: Employee’s Testimony Alone Enough to Defeat Summary Judgment in Unpaid Overtime Case, Atlanta Employment Attorneys Blog, Sept. 30, 2015