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Changes in overtime regulations could mean more in your paycheck

Existing regulations for determining who is entitled to receive overtime pay have not changed for over a decade. That is set to change this summer. The U.S. Department of Labor has proposed updating these regulations in the Fair Labor Standards Act (FLSA) to increase the number of workers who may be considered non-exempt employees, or eligible for overtime pay. Under the new rules, people who earn as much as $50,440 annually will be eligible for overtime.

In most cases, non-exempt employees are entitled to overtime pay, which is 1.5 times their normal hourly rate, for any hours worked over 40 hours in a week. By contrast, exempt employees cannot claim overtime if they work more than 40 hours. Under current FLSA regulations, employees are classified as exempt if they perform mostly managerial functions and earn a minimum of $23,660 per year as an annual salary.

Why are these rules important?

The changes to FLSA will increase the number of people in the non-exempt category by an estimated five million workers. The basis for this change? The government believes the rules of classification are being abused by employers.

Imagine that you work as the assistant manager of a fast food restaurant. To avoid paying cashiers overtime, the manager or parent company may ask you to work the register on a regular basis to cover shifts or busy times. Since you meet the minimum requirements of being an exempt employee, it becomes a simple cost-benefit analysis for the business. To cover these shifts, it could:

  • Bring on an extra employee, who will cost about $10 an hour
  • Allow another employee to work overtime at a rate of $15 an hour
  • Ask you, the assistant manager, to cover those hours for $0 an hour

How are businesses reacting to this proposed change?

Because of the change in salary requirements, it appears that most businesses will need to look at their staffing patterns carefully to determine if they are in line with the new regulations. Some companies will fight implementation; others may ignore the new overtime guidelines, which are expected to roll out by the end of the summer 2016. Still others may implement changes to their staffing models to accommodate the new regulations.

What should I expect as an employee?

If you are currently considered a non-exempt employee, expect your employer to evaluate what you do and how much time it takes you to do it. Here are some possible scenarios:

  • Your employer may raise your salary to the new threshold of $50,440 per year to make sure you stay exempt.
  • Your employer may insist that you start keeping track of your time and prevent you from working more than 40 hours a week.
  • Your employer may lower your base salary so it can accommodate for overtime pay that management must now pay you; this ensures that your present annual salary stays where it is now.

Labor attorneys on both sides of the issue expect many lawsuits as businesses and workers try to interpret the new rules. Whether you are an employer seeking help in implementing the new regulations, or a covered employee being denied overtime pay, a certified Florida employment attorney can help you navigate these new changes.

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