- Labor Department Doubles Overtime Pay Threshold for Full-Time Employees
- June 20, 2016 | Author: Katherine J. McLay
- Law Firm: Burns White LLC - Pittsburgh Office
The Labor Department has finalized and announced its final rule to increase the salary threshold for overtime coverage from $23,660 to $47,476. The Department expects that the new rule will extend coverage to nearly 5 million workers, who will see either a wage hike or a reduction in hours worked.
The overtime salary threshold is the salary below which almost all salaried employees qualify for time-and-a-half pay for hours in excess of 40 per week. The Department’s new rule, then, will render workers earning annual salaries of less than $47,476 eligible for overtime pay. Employees over that threshold may still be eligible for overtime pay depending on their specific job duties.
Department officials believe that such a significant jump is necessary to address the effect of inflation on the current threshold. Under the previous threshold, which took effect in 2004, only 7% of full-time workers qualified for overtime pay. The new rule also ties the overtime threshold to measures of salary growth, ensuring that the threshold will be automatically updated every three years.
Employers have six months to examine their business needs and make necessary adjustments before the rule’s December 1, 2016 effective date.