On Tuesday, the U.S. Department of Labor issued its final rule regarding overtime regulations.
The final rule, which becomes effective Dec. 1, according to feds:
* Raises the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
* Automatically updates the salary threshold every three years, based on wage growth over time, increasing predictability.
* Strengthens overtime protections for salaried workers already entitled to overtime.
* Provides greater clarity for workers and employers.
Clark Partington attorney Richard Sherrill yesterday gave background on the rule on New Talk 1370 WCOA’s “Pensacola Speaks.”
“President Obama directed the Department of Labor last year to issue regulations and a final rule, as it’s called, to the Fair Labor Standards Act, the FLSA, dealing with overtime for salaried employees below a certain threshold,” Sherrill explained. “The threshold had not been updated since 2004. So over a decade, the threshold for a “highly compensated employee” was set at $23,000 a year so that anyone making above that amount was not subject to overtime, essentially.
He added, “The final rule, effective beginning December, provides that that amount is essentially doubled from $23,000 to $47,476, so that anyone who’s a salaried employee making making $47,476 or less and who works more than 40 hours a week is entitled to overtime.”
According to the Department of Labor, the December 1 deadline gives employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.
The Florida Retail Federation isn’t happy with the final rule.
In press release, FRF President/CEO Randy Miller said, “Here’s another example of the federal government attempting to help the lower and middle class by extending the overtime rules, when in fact, it will do the exact opposite and hurt those same people by reducing the number of hours they’re allowed to work, thereby reducing their incomes. This rule will also cost Florida retailers millions of dollars in administrative costs, and thousands of employees would be changed to hourly, thereby negatively impacting their pay, their benefits and their families. We are extremely concerned about the impact this rule will have on Florida’s businesses and economy, and we are working with our state and federal partners to identify any possible options for recourse on this drastic decision.”
Sherrill talked about the positives and negatives of the rule.
“Certainly for any employee who’s working more than 40 hours, under $47,000 salary, that employee’s going to cost more per hour for any overtime,” he said. “Wage expense will go up.”
However, he added, “Now, the counter to that is that the Department of Labor believes that that will cause employers to identify that overtime, cap the overtime, for which the employee’s not being paid anything more, and then push that work to additional employees. That has a benefit on the overall economy of chipping away at unemployment, putting more people to work, and spreading out the tasks that the Department of Labor says should be worth more overtime to other employees at regular wages.”
Sherrill said, “The Department of Labor’s response is that it’s going to make businesses more efficient and it’s going to increase employment.”