This week, the Department of Labor updated its overtime regulations policy, which will extend pay protections to more that 4 million workers, according to news from the federal government.

Under the rule, workers making $47,476 or less a year are eligible for overtime pay if they work more than 40 hours a week. The former threshold was $23,660. The labor department says the new figure is the 40th percentile of earnings in the South, the lowest-wage region of the country. Originally, the threshold was planned to be $50,400.

The new rule also establishes a mechanism to update salary and compensation levels every three years, adjusted for cost of living and inflation.

Companies can use nondiscretionary bonuses and incentive payments like commissions to satisfy up to 10 percent of the new standard salary under the new rule.

The effective date of the final rule is December 1, 2016.

The National Retail Federation, an industry group representing business owners, says the new rules are a failure.

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“… the DOL has turned the rules upside down – from a well-established way of ensuring that workers are fairly paid for their time to a controversial one-size-fits-all federal mandate many workers it is supposed to help don’t want, that will block upward career mobility, and that will cost businesses millions of dollars in administrative costs while giving few workers an actual increase in take-home pay,” the group said on its website.

The group said the new rule will force salaried workers to become hourly workers — and will damage morale and career mobility.

“An increase in overtime eligibility does not mean an increase in overtime pay,” the website said. “It’s a career and morale killer. Retailers surveyed indicate half of their current salaried workforce will be reclassified as hourly a result of these rules and uniformly agreed that reclassifying career professionals will damage employee morale.”

2 COMMENTS

  1. As a small business owner I’m being strangled by capricious Federal Rules. Our one assistant manager, earning $15 an hour and classified as salaried works 45-50 hours a week, is going to be replaced with two part time employees at minimum wage, each 25 hours a week. I get more employee coverage, I will pay less total salaries, and I’m eliminating all benefits. Thank you Department of Labor for your wisdom. Let them collect food stamps. Enough of this nonsense already.

    • As a business owner how do you replace an assistant manager with two minimum wage employees without putting yourself on the path to food stamps?

      You aren’t actually paying $15 hour salary if they work more than 50 hours. The more they work the less $/hr. Technically you are paying them $10/hr if you actually paid overtime.

      Must not be too bright an employee if they fall for your $15/hr salaried worker obfuscation. Maybe that’s how you you can replace them with two minimum wage workers.

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