How will the new overtime rule affect you?

By Christina Isnardi and James E. Murphy

Yesterday, the Obama administration unveiled a new overtime rule that would double the salary threshold at which executive, administrative, and professional employees are exempt from overtime pay. 

Previously, a worker would be eligible for overtime if he or she received less than $23,660 per year ($455 per week). But this new rule will make a non-exempt employee eligible to receive overtime if he or she receives a salary of less than $47,476 per year ($913 per week).

Here are some possible effects to your income if your salary falls below the new threshold and if you are considered a non-exempt employee:

1.    You must receive overtime pay
For each hour you work over 40 hours per week, you must receive half of your hourly wage in addition to your hourly wage. For instance, if you are compensated $20 per hour, you must receive time and half, or $30 per hour, for all hours worked over 40 hours per week. Additionally, your employer must track your hours.

2.    You may experience a limit in hours
Your employer may decide to hire additional workers instead of requiring you to work extra hours. 

3.    You may get a small raise
If you are currently compensated just under the new salary threshold, your employer may decide to increase your salary to the new threshold to avoid paying you overtime. 

Assuming there are no changes to this new overtime rule after congressional review, this rule will be effective December 1, 2016.

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