You might have heard about some changes coming to overtime pay regulations, and we’re here to break it down for you in simple terms. The U.S. Department of Labor’s Wage and Hour Division (WHD) has proposed new rules regarding who qualifies for overtime pay protection under the Fair Labor Standards Act (FLSA).
What’s the FLSA and Overtime Pay?
The FLSA sets the rules for minimum wage and overtime pay in the United States. It says that if you work more than 40 hours a week, your employer should pay you one and a half times your regular rate for those extra hours. However, not everyone gets overtime pay, and that’s where the changes come in.
The “White Collar” Exemption
Some employees are exempt from overtime pay because they fall under what’s known as the “white collar” or executive, administrative, or professional (EAP) exemption. To qualify for this exemption, you generally need to meet three criteria:
- You must earn a fixed salary (it doesn’t change based on how much you work).
- Your salary must meet a minimum amount.
- Your job duties should mostly involve executive, administrative, or professional work.
Proposed Changes
The DOL is suggesting some adjustments to these criteria to determine who qualifies for overtime pay exemptions:
- They want to raise the minimum salary you need to earn to qualify. Currently, it’s $684 per week or $35,568 per year. They’re proposing to increase it to $1,059 per week or $55,068 per year.
- For highly compensated employees, they’re looking to raise the total annual compensation requirement from $107,432 to $143,988.
- Technology employees paid hourly might also be eligible for overtime pay if they earn less than $27.63 per hour.
Additionally, these changes might get updated every three years automatically.
Impact on Employees in Different Places?
The proposed salary thresholds will apply to most U.S. territories, including Puerto Rico, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands. Currently, some of these places have special salary levels.
In American Samoa, where there’s a special minimum wage rate, they’re thinking of having a unique salary level too. Right now, it’s $380 per week, but they’re considering raising it to $890 per week (which is 84% of the proposed standard salary level).
Motion Picture Industry Update
For those working in the motion picture industry, there are changes coming too. The required base rate might increase in proportion to the proposed salary level test, resulting in a base rate of $1,617 per week (or a proportionate amount based on the number of days worked).
These changes are meant to ensure that more people receive fair compensation for their work. Keep an eye out for updates and be prepared for these adjustments if they affect you.