Changes to Overtime Pay by Department Of Labor

Changes will soon be coming to more than four million American paychecks, including close to 400,000 Californians. In addition to the minimum wage hike around the country, the Obama Administration passed this as the final rule in his changes to the Fair Labor Standards Act. This comes as an addition to the proposed promise of $15 an hour minimum wage hike statewide by 2022 in California.

Effective December 1, 2016, the eligibility threshold for time-and-a-half pay will increase to $47,476 with more than 40 hours put into a work week. This could affect workers in a few different ways. Under the new rules, a person working more than 40 hours in a week with a salary between $23,660 and $47,476 will earn time-and-a-half pay. Employers may also decide to raise employees’ base pay in order to avoid having to pay overtime, or restrict employee hours to avoid the time-and-a-half pay, according to a report by CNN.

In order to comply with the regulations, employers can either:

– Pay overtime
– Increase base salary to avoid overtime payment
-Convert salary employees into hourly to track them more easily but the workers will lose certain benefits and prestige and may view the shift as a demotion
– Instruct current full time employees not to work more than 40hrs and bring part time workers to pick up the slack.

The Department of Labor also established automatic increases every three years to the salary thresholds, beginning January 1, 2020. The eligibility requirements for employees to receive the benefits of this rule are determined by an employee’s specific job duties. To see a list of these exemptions, please see the United States Department of Labor website.