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What the New Overtime Rule Really Means

Eastridge Blog posted by Angela Ma on

The Department of Labor (DOL) announced a new overtime rule on May 18, 2016 that more than doubles the current salary threshold for paid overtime.

This new rule marks the first time since 2004 that the overtime rule will be updated.

Employee Working Overtime

The Facts

The DOL announced an increase in the salary threshold and rise in eligibility for paid overtime from an annual salary of $23,660 ($455 per week) to $47,476 ($913 per week). This new overtime rule will affect 4.2 million workers in the United States and will be effective starting December 1, 2016.

It was also announced that the salary threshold will be updated every three years, based on wage growth over time.

These changes are set to strengthen overtime protection for salary workers who meet the requirements and provide more clarity to both workers and employers.

How It Affects You As An Employer

As the new rule will take effect December 1, 2016, you have more than six months to prepare by adapting your hiring methods and budgeting your finances accordingly.

In response to the new overtime rule, employers can limit workers’ hours to 40 per week, raise workers’ salaries above the new threshold of $47,476, or pay time-and-a-half for overtime work if workers’ salaries fall under the new threshold.

The new rule incentivizes employers to spread employment by hiring more workers to avoid current employees from working longer hours.

How It Affects You As A Worker

While hourly workers qualify for overtime pay, two factors have determined whether a salary worker qualifies: what their role consists of and how much they are compensated.

Unlike the old overtime rule which classified high-level workers as exempt from receiving overtime pay, the new rule clearly states that all workers who fall under the new threshold of $47,476 are eligible to be paid time-and-a-half for overtime work, regardless of job title or level of expertise.

As a result, the new overtime law may boost employee well-being by reducing overwork and providing a fair compensation for the hours worked.

How Eastridge Can Help

If you’re an employer, Eastridge’s Workforce Management Division can help you. Our management solutions can help you mitigate risk, reduce hiring costs, and find the right candidates for hard-to-fill jobs.

If you’re a worker, Eastridge’s Workforce Recruitment Division can help you. From Administrative to Healthcare, our team can help you reenter the job market in a variety of industries and find a position that best matches your skill set and interests.

Let us help you prepare for this upcoming change. Contact us today to stay ahead.


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