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New Overtime Laws Announced


Yesterday, President Obama issued an order that fundamentally changes the rules and regulations concerning calculation of overtime payments under federal law. These changes are going to result in making overtime pay available for millions of workers nationwide. rules.

Under Obama’s rule changes, the salary threshold for overtime eligibility would increase to $970 per week in 2016. As a result, workers earning a yearly salary of $50,440 or less automatically would now be eligible to receive overtime pay.

Before the change, the threshold was $455 a week. This meant that a salaried worker making more than $23,660 a year would not qualify for overtime pay under federal law.

The last update of the threshold occurred way back in 2004. Therefore, according to the Obama administration, the threshold had been impacted by inflation.

Hourly employees automatically receive for overtime pay for any hours worked in excess of 40 hours per week.

The new rules don’t apply to workers who are classified as executive, administrative or professional employees.

For workers who earn a salary higher than $23,660 a year, employers perform a “duties test”: They assess whether the worker performs mostly executive, administrative or professional duties. If so, the worker is not entitled to earn overtime. This is known as the “white-collar exemption.”

The Obama administration is still considering changes to this exemption and has asked for comments on whether the duties test is working as intended.

Business groups, including the Chamber of Commerce, have derided the new changes. They argue that employers will simply reclassify many of the workers who now receive salaries as hourly employees at low hourly rates and then will cap their hours.

The Law Offices of Daniel Feder represent hourly and salary employees in disputes over unpaid overtime and misclassification. If you believe you have not received all compensation owed to you, please contact our offices at (415) 391-9476.