The (Over)Times they are a Changin’
On July 6, 2014, a notice of proposed rule-making for changes to the Fair Labor Standards Act overtime rules was published in the Federal Register (80 FR 38515). Interested parties were invited to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. See the official Department of Labor (DOL) announcement here. That comment period closed last Friday and based on the pattern of events, we can expect to see a rule published within the next 90 days or so to finalize the changes.
There could be changes in things like the duties tests or other aspects of the time-and-a-half overtime requirement, but the primary change is expected to be in the salary test. The current salary test is set at $455 per week or $23,660 per year where it has been since the early 90’s. A simple escalation of that number to today’s dollars would yield a number somewhere north of $900 per week. The proposed rule would set the new test amount at $921 per week or about $48,000 annually. The final number could be slightly more or less. Click here to access the Docket Folder for the proposed rule and associated documents. You can even read any or all of the 5,745 comments received in response to the publication by clicking here.
In any event, the days of paying a salaried manager $30,000, $35,000 or even $40,000 a year for a work-week that stretches to 50 or 60 hours may be rapidly drawing to a close. Under the proposed new rules, that manager would be entitled to time-and-a-half for all hours over 40 in a week and the increase could be considerable.
If that manager consistently worked a 50-hour week, a $30,000 annual salary would rise to $41,250 with the overtime – almost a 38% increase. At the 60-hour mark, the wages due would exceed $52,000 – a 75% increase.
Of course, an increase in wages for the employee also means an increase in costs for the employer. How this might play out in the employment market is an open question. But, it’s one we may have an answer to soon.