Does Your Employee Make More Than $47,476?

Taking care of business, and workin’ overtime

By now, employers and their workers alike have all heard about “Obama’s Overtime Law”, as it’s commonly labeled, the labor amendment officially announced May 17 that will increase overtime accessibility for millions of American workers. The Labor Department’s announcement drew mixed reactions. The rule will raise the salary threshold for overtime eligibility from the $455/week it had been at since 1938’s Fair Labor Standards Act to $913/week, ultimately establishing the key mark of a $47,476 per year salary. This will ensure protection to 4.2 million workers.

In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act, and to simplify and modernize the rules so they’re easier for workers and businesses to understand and apply. The department has issued a final rule that will put more money in the pockets of middle class workers – or give them more free time. The final rule will also automatically update the salary threshold every three years, based on wage growth over time, increasing predictability. The Department of Labor expects it to strengthen overtime protections for salaried workers already entitled to overtime, as well as “provide greater clarity for workers and employers.”

The final rule will become effective on December 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.

Many expect the rule to add jobs. A probable response by employers is to hire more workers and have them work fewer hours. Goldman-Sachs predicts the number to be in the range of 100,000. One of the primary concerns for the economy is which industries these new jobs will go to—who will benefit, and which sectors will face adversity. Although speculation is aplenty, the law was originally designed for the manufacturing industry; and this could adversely hurt tech startups and small businesses, according to Forbes. On the other hand, many are predicting it is likely to help the restaurant and food service industries. Other critics anticipate an overall dent in the economy.

What do you think? EA welcomes input from our readers on this issue. Feel free to e-mail comments or opinions on the new rule to us at charlie@barks.com.

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