It’s official, the U.S. Department of Labor’s (DOL) long-awaited rule on overtime pay eligibility was made final this past Monday, May 23, 2016. And, when it goes into effect on December 1, 2016, it will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.
While the actual rule is 508 pages in length, the DOL released a 3-page summary, which boils down to these points:
- Guarantees time-and-half pay to any salaried employee earning under $47,476 a year ($913 a week) and who works more than 40 hours in a week.
- Automatically updates the salary threshold every three years, tying it to the 40th percentile of full-time salaried workers in the lowest-income Census region. The first update would be Jan. 1, 2020. Furthermore, the DOL projects a salary threshold of $51,000 by Jan. 1, 2020.
- Makes no changes in the duties tests used to determine whether a salaried employee above the threshold is considered exempt from overtime pay.
- For the first time, it allows certain bonuses and incentive payments to count toward up to 10 percent of the new salary level if the payments are made on at least a quarterly basis.
Several industries will be affected by this change, but there’s no doubt that the biggest impact will be on the service industry including restaurants and hospitality businesses. As such, there’s no shortage of controversy surrounding the issue.
In fact, lawmakers, employers and non-profits are joining together and calling for “immediate legislative efforts to defund, block or nullilfy the rule,” the reason being that “the threshold for exempt employees in the final regulations is still too high.”