Overtime Pay will soon Expand to Millions More
Effective December 1, 2016, anyone with a salary less than $47,476 per year is entitled to overtime pay whenever their weekly hours exceed 40. This more than doubles the present salary cap of $23,660. As a result, nearly 4.2 million more salaried employees will qualify for overtime pay.
In 1975, 62 percent of salaried workers qualified for overtime pay compared with 7 percent in recent years. Under the new law, according to Secretary of Labor Thomas Perez, 35 percent of workers will be eligible for overtime pay.
Many employers have expressed concerns over this new law. Ultimately, employers can address the law the following ways:
- Pay time-and-a-half for overtime work;
- Raise salaries above the new threshold; and/or
- Limit employees to 40 hours per week and hire part-time employees to cover the extra hours needed.
Further, employers should note that nondiscretionary bonuses and incentive payments (e.g., commissions) can be used to satisfy up to 10 percent of the salary threshold.
The salary threshold will be updated every three years.