New Salary Overtime Rules

Do you or someone you know work in a salary position earning less than $50,000 a year?

Caveat: read closely. This post is not about me, my wife or anyone in my household. But if you are on salary, earning less than $50,000 a year, this affects you significantly. It affects millions of people but oddly, many of my friends, family and co-workers know nothing about this fundamental shift in laws affecting salary pay and overtime exemption.

We all know someone at work who routinely works 60 or more hours a week. They are usually salaried and exempt from overtime, as the current law says the bottom for exemption is around $24,000 a year. Whether they work 40 or 70 hours a week, they make the same salary. Most employers pay their employees well and treat them well. For those that don’t, this is going to be interesting.

Finally, after almost 40 years, the federal government is moving forward to make significant changes for those workers who are both salary and make less than around $50,000 a year. Again, it is changing the threshold from around $24,000 to about double that amount. The current minimum was set decades ago and wasn’t intended to be used as it is currently functioning.

This means if you earn less than $50,000 a year and are paid a salary regardless of hours worked that your employer is going to be held accountable to track all your hours worked and pay you overtime for any over 40 – or raise your pay to over $50K to keep you exempt from overtime.

It’s going to be fascinating to watch businesses struggle to be in compliance. In my example, I know someone who routinely works 12 or more hours a day. In the future, her employer is going to be required to track her hours worked. If she isn’t given a raise to be over the new $50,000 minimum, she is going to be paid overtime for all the hours worked over 40. She will get a better picture of what an hour of her time is worth and the employer can do the same.

Meanwhile, the slackers she works with who are sneaking out every day working the minimum 8 a day are going to be getting a hard look by the employer. If those slackers are making $50,000 or more a year and are salaried and exempt from overtime, it would make sense for the employer to throw more work on them, as there would be no additional burden on the company financially to get more work out of them. The same will no longer be true for the salaried non-exempt people earning less.

Once all the fear and goofiness subsides, the market will be better suited to compensate people for time worked and those employers who are using the salary-exempt model to exploit workers are going to amend their misguided way of doing business.

Just an FYI.

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