Overtime Pay Proposal
Jul 07, 2015
Recently President Obama announced a major change in labor laws by introducing a proposal to update rules that would extend overtime pay to almost 5 million workers. Below are a few important points that are part of this proposal:
- The threshold for salaried employees who are guaranteed overtime is proposed to increase from $455/week or $23,660/year to $970/week or $50,440 per year beginning in 2016. This new proposal guarantees overtime to equal the 40th percentile of weekly earnings for full-time salaried employees.
- Minimum wage and overtime pay will be extended to almost 5 million workers within the first year of the proposal.
- Millions or workers and employers will be provided more clear definitions of who should actually be receiving overtime pay.
- Salary threshold for overtime pay will be adjusted automatically for inflation or wage growth over time.
This new proposal is estimated to cost new employers between $240 and $255 million per year in direct costs, according to the Obama administration. The administration plans for this proposal to be adopted by the end of 2015, resulting in implementation by January 2016.
By: Kristin Metzger, CPA
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