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President Obama's Overtime Rules Change

President Barack Obama has just announced important changes to federal overtime law, which will go into effect December 1, 2016. Under the new rule, employers will be required to pay overtime to employees, who earn less than $47,476 per year or $913 a week, when they work more than 40 hours a week. Presently, the threshold is $23,660 per year or $455 per week.  These changes in federal law will likely lead to changes in employee classification and spur many questions from both employer and employee. 



What was the old law?

Generally, employees, who work more than 40 hours in a week, are entitled to overtime pay. However, there are several “white collar” exemptions. Under the previous rule, employees meeting the following criteria were not entitled to overtime pay.

  • Employees whose primary duty is managerial, professional, or administrative; and
  • Employee is paid on a salary basis more than $23,660 per year ($455 per week).

The salary threshold for the “white collar” exemption was set in 1975. At the time $23,660 was a realistic indicator of whether an employee was in an appropriate position in the company to be considered exempt.  Today's change updates this figure to a more realistic and meaningful level.

Under the previous version, a retail assistant manager, who mostly stocks shelves at a chain location, could be considered exempt and not receive overtime payment for a 40-60 hour work week so long as he made more than $23,660 per year.  The employer would still have to show that his primary duty is management, however, and many employees challenged this designation in court.


What changes can be expected under the new law?

The new law increases the salary threshold of the “white collar” exemptions from $23,660 to $47,476 per year. Under the new law, only employees who meet the following criteria are exempt from overtime payment.

  • Employees whose primary duty is managerial, professional, or administrative; and
  • Employee is paid on a salary basis more than $47,476 per year.

The new law will also be updated every 3 years to keep up with inflation and the cost of living. 

Can my employer change me from salary to hourly?

Yes and this is likely to happen for over 12 million workers.

This is expected to happen soon and will force employers to convert salaried workers who are paid less than $913 a week to hourly non-exempt workers.  For example, if an assistant manager today is paid a flat salary of $800 per week after this rule is changed, they will be converted to hourly ($20 per hour) and paid overtime premiums ($30 per hour). 

Many workers may question whether their rights had been violated in the past.  The answer to that question is “maybe.”  It could be that they were misclassified before the change, even though they made more than $23,660.  Many times employers misclassify workers under these laws in order to save payroll dollars. 


To determine whether you have an overtime claim for your work before this rule takes effect, answer these questions:

      • Do you hold a management sounding title, like “Assistant Manager” or “Department Head” or “Shift Supervisor?”
      • Do you spend most of your time doing the same hourly work as your subordinates (stocking shelves, cashiering, cleaning, etc…)
      • Are the management duties that you perform mundane and not very high level (making schedules, issuing minor discipline, etc…)
      • Do you work more than 40 hours per week?
      • Are you paid a salary and not paid extra when you work overtime?
      • Are you paid overtime but under a confusing “half time” formula?

If you answered “yes” to these questions, you may have the right to pursue an overtime claim against your employer under federal law.


Will this new rule be retroactive?

No, the rule change is prospective and is effective December 1, 2016. 

However, if you have been a salaried employee making less than $47,476 per year in the past, you may have an overtime claim against your employer for the work you did in the past. It is important to act quickly. There is a three-year statute of limitations on overtime claims. Should you meet all the appropriate criteria, it is possible to sue your employer for the last three years of unpaid overtime.


Where can I go for more information?

The U.S. Department of Labor (DOL) has a Fact Sheet on this topic that is helpful. You can find it by clicking here .


Hayber Law Firm | Hartford Overtime Attorney

You deserve to be compensated for time worked. If you aren’t being properly paid or have questions about how the new FLSA law affects you. Contact the Hartford wage and hour lawyers at Hayber Law Firm by filling out our online form.


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