The Obama administration expanded overtime eligibility for millions of workers. This should extend overtime pay to 4.2 million more workers. The announcement by the Obama administration happened last Thursday.
“If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones,” said President Barack Obama in a statement previewing the announcement.
The rule increases the salary threshold below which most white-collar, salaried workers are entitled to overtime from the current $455 per week (or $23,660 for a full-year worker) to $913 per week (or $47,476 for a full-year worker).
In the words of Vice President Joe Biden “Right now, you’re guaranteed overtime if you’re an hourly worker, but if you’re salaried, you’re only automatically guaranteed overtime if you make less than $23,660. If you’re a manager on salary and you work an extra 10, 20, 30 hours a week—you often don’t get paid a dime more for those additional hours. That’s simply wrong. Starting in December, we’re making sure that more workers get paid fairly for the overtime hours that they work. With this new rule, we’re increasing the cutoff for automatic overtime for salaried workers to $47,476—most salaried workers making less than $47,476 will be guaranteed overtime pay for working more than 40 hours a week.”
Accountants will need to advise their business clients and the organizations where they work about the change. AT ThayerONeal we can help you understand it.
“With one in five business owners unaware of the DOL’s proposed overtime rule and a limited window to meet the new standards, the time for business owners to act is now,” said Martin Mucci, president and CEO of Paychex.
The changes may have a negative impact on smaller accounting firms and the millions of small business clients they represent . According to Sageworks chairman Brian Hamilton and research specialist Mary Ellen Biery, “ will kill startups, and it will hurt young people who will not be able to be hired in those start-ups”.
The new ruling was designed to protect Millennial workers. As far as numbers, they represent 28.2 % of the salaried workforce, but 36.3 percent of those covered by the new rule (Ross Eisenbrey, vice president of the Economic Policy Institute).