What to Expect with the New Overtime Pay Law

The newly-approved overtime pay legislation is set to take effect on December 1st, just a few short months away, but most employers and employees alike don’t know the details. If you are in this same group, don’t worry. You still have time to figure out your new rights as an employee or your new obligations as an employer.

To begin, the law has raised the minimum overtime compensation threshold for salaried workers quite significantly. In the past, if you made more than $23,660 a year in salary pay, you were not eligible for overtime pay, even if you were asked to work 60 hours a week. The new bill has effectively doubled that threshold to $47,476. This changeup is expected to add another 10 million or so salaried employees into the eligibility status.

In response to the new changes, employers have essentially three options:

  1. No changes: Keep running business as usual and start doling out time-and-a-half pay to any salaried employee under that threshold that works more than 40 hours in a week. The law was revised with this exact scenario in mind, as it wants to award Americans who put the majority of their daily lives into their jobs. It should be noted that this would require salaried employees to start clocking in and out and tracking their hours and lunches.
  2. Income increase: If an employer cannot cope with the idea of implementing a timeclock system or wants to simply sidestep any possible overtime pay violations, they can increase all of their employee salaries to $47,477 or more. The increased minimum is a reflection of what is considered a livable wage, and it will also automatically increase every three years to adjust for inflation.
  3. Limited time only: What happens if an employer doesn’t want to pay their employees more? Hours become restricted. An employer can choose to not raise income but not allow employees to work more than 40 hours in a week and still avoid any overtime pay violations. The optimistic side of this option is that additional workers may be hired to fill in the productivity gaps created by a lack of overtime hours; thus, unemployment rates could drop.

What Will Happen at Your Workplace?

It is hard to say what your employer will choose to do when December 1st rolls around. Small companies may be more likely to use a timeclock system, whereas large corporations might raise salaries to avoid complications. However, some speculate that certain companies may raise salaries for some employees and lay off others to compensate for the payroll adjustment.

What you do need to do is pay attention to company announcements in the coming months, if you are an employee. If you are an employer, you have to start working with your accountants and executives and figure out what you can do in regards to the upcoming changes without breaking your own company’s wallet. If you require help in either situation, you can turn to Buckley Bala Wilson Mew LLP and our Atlanta employment law attorneys for assistance.

Call 404-781-1100 today and ask for a case analysis with our highly-experienced team.