U.S. Labor Department Proposes New Overtime Rules Favoring Exempt Workers

MELVILLE, NEW YORK, July 17, 2015 – As per Newsday, President Obama is squarely behind the U.S. Labor Department’s proposal and suggests changes that would make low-wage managers and professionals eligible for overtime if they are paid less than $970.00 a week, compared with $656.25 a week in New York now.

These changes would be the first increase in 11 years for a salary benchmark that under federal labor law is key in determining if a worker earns enough to be exempt from overtime. These changes will come from proposed new overtime rules that force businesses to pay overtime to most workers who earn a salary of less than $50,440 a year, instead of only those who earn less than $23,660 a year. The change in salary (to adjust with inflation) would extend overtime at 1.5 times pay to 5 million more Americans workers. Other areas that need to be hammered out regarding this issue include how bonuses should factor in, and a possible revision of the “duties test” for exemption.

There have been claims contending that employers easily avoid paying overtime currently by giving employees manager titles and paying them just above the $23,660 annual threshold, even though those exempt workers are supposed to perform mostly administrative, executive or professional duties. That will not fly under the new rules.

Obama and the U.S. Labor Department contend that the unchanged threshold defeats the original purpose of the salary requirement for exempt employees, which was to exclude high-wage earners from overtime eligibility. As it stands, it is also excluding lower-wage employees from overtime eligibility. Yet another law that went topsy-turvy … the people it was meant to benefit get no benefits except a lot of extra unpaid work hours and the business owners and people of high net worth in stocks rake in the cash as Wall Street climbs to new heights.

“Now, no matter what your boss calls you — store manager, shift supervisor, assistant to the regional manager — if your salary is below the threshold, you have to be paid for your extra hours,” Ross Eisenbrey, vice president of the Economic Policy Institute explains in policy memos. “This is a simple and important protection.”

Predictably, many employers are contacting their lawyers in droves, confused and wary about these proposed changes, and are trying to figure out what their next moves will be if the changes are adopted.

There are factions working hard to, once again, make this possible “win” to exempt employees into yet another defeat for the private workforce. Business groups insist the overtime rules change won’t actually benefit the workers as intended. In fact, businesses already are looking at alternatives to paying overtime. “Most will get as creative as possible,” says Mark Neuberger, a labor attorney with Foley & Lardner in Miami as per the Miami Herald. Rather than fattening paychecks, employers could simply hire more part-time workers, send workers home after 40 hours, boost a salaried worker a few thousand to avoid paying overtime, or lower a worker’s base hourly pay to offset any overtime he would be owed. Currently, all of these actions are legal.

At the request of the National Retail Federation, which estimates that the increase could cost retailers $9.5 billion annually in added payroll costs, the Department of Labor will hold a 60 day comment period for the proposal, which runs through Sept. 4, after which the comments will be published in the Federal Register, a public forum administered by the U.S. Government. Employees and employers alike are invited to submit their comments on the proposed overtime rule.

You may submit your comments through the Federal eRulemaking Portal. Use the blue “Comment Now” button on the top right-hand side.

The changes could be adopted by the end of the year for implementation in 2016.

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By | Friday, July 17th, 2015 | Comments Off on U.S. Labor Department Proposes New Overtime Rules Favoring Exempt Workers

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