The latest news, which can be considered a good one for many Americans is that the U.S department of Labor has started reconsidering the new Overtime law which went at the bottom of the pile in the past.
What is this New Overtime Law Any Way?
Under Obama administration, the Federal Government was expected to levy a law that would have made additional 4 million American workers (working over 40 hours a week) eligible for overtime pay. While individual businesses might look at rewarding their best workers and securing them with a key man insurance policy, there tends to be critical changes in the law and remuneration structure that need to be brought in.
In that regard, it must be noted that the law somehow didn’t get enacted earlier but the US Department of labor has started pondering on it again.
Who are Eligible for Overtime Pay
In order to understand the eligibility under current overtime rule, it is necessary to understand a little background.
when it come to overtime the Federal Government divides all US workers in two distinct categories:
They are exempted or not required to receive the overtime pay. This category includes those who perform relatively high level executive work, (outside) sales employees etc.
Currently, a worker earning at least $23,660 per annum is an exempt worker. This was set to change as the Obama administration proposed to raise the threshold by more than 100%. The new threshold was $47,476.
Non Exempt Workers
Any worker not falling in the “Exempt” category. Additionally, you need to earn less than $23,660 to be considered as one.
The current “exemption” level was set in 2004 and never got fine tuned in accordance with the inflation over the years. The proposition from Obama Administration was put to halt as a result of a temporary injunction order issued by the Texas judge.
However, now, the new federal government is reconsidering this issue.
(Learn about this cloud accounting software so that you can manage your business on the go)
So is this the same old Overtime Law?
No. The Department of Labor clearly stated they are working on the new Overtime law. Moreover, they are waiting for the Fifth Circuit Court of Appeals to confirm that it has the right to set that threshold at all.
So it’s all new law the department is working on. This is further corroborated when the new administration denied any possibility of defending the overtime rule put forth by the Obama administration in the court.
So in order to gather important information, the Department of Labor seeks out input from the general public and published the request for information through below questions about overtime rule on their website.
Questions Pertaining to New Overtime Law
- “Should the 2004 salary test be updated based on inflation? If so, which measure of inflation?
- Would duties test changes be necessary if the increase was based on inflation?
- Should there be multiple salary levels in the regulations? Would differences in salary level based on employer size or locality be useful and/or viable?
- Should the Department return to its pre-2004 standard of having different salary levels based on whether the exemption asserted was the executive/administrative vs. the professional?
- Is the appropriate salary level based on the pre-2004 short test, the pre-2004 long test, or something different? Regardless of answer, would changes to the duties test be necessary to properly ‘line up’ the exemption with the salary level?
- Was the salary level set in 2016 so high as to effectively supplant the duties test? At what level does that happen?
- What was the impact of the 2016 rule? Did employers make changes in anticipation of the rule? Were there salary increases, hourly rate changes, reductions in schedule, changes in policy? Did the injunction change that? Did employers revert back when the injunction was issued?
- Would a duties-only test be preferable to the current model?
- Were there specific industries/positions impacted? Which ones?
- What about the 2016 provision that would permit up to 10% of the salary level to be satisfied with bonuses? Should the Department keep that? Is 10% the right amount?
- Should the highly compensated employee exemption salary level be indexed/how? Should it differ based on locality/employer size?
- Should the salary levels be automatically updated? If so, how?”
The comments can be submitted on the website. Last date to submit your feedback is September 25, 2017.