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New Overtime Threshold Set at Just More Than $47,000

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Back in August of last year, KNPR's State of Nevada did a story on the possibility of the Dept. of Labor changing overtime rules, so millions more workers will be eligible.

Currently, anyone making a salary of $23,660 is automatically eligible for overtime pay if they work more than 40 hours a week.

Last week, the Obama Administration announced it will be changing the threshold for how much workers make in order to get paid overtime. On Dec. 1, that threshold will change to $47,476.

That means anyone who makes under the that number will be paid overtime if they work more than 40 hours. Those who make more than that will be subject to what is known as a duties test to determine if they get overtime.

A duties test is essentially a look at what an employee does for the majority of her work day, Boyd Law School professor and labor expert Ruben Garcia told KNPR's State of Nevada.

“It really depends not on the label your employer gives you but the duties you are engaged in for most of your time,” he said.

The rules are designed really to separate people who work in executive, administrative or professional careers from people who don't. But when Congress passed those rules, it did not give a lot of detail about what those labels meant. It has been up to the Labor Department to flesh out some of the specifics.

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Garcia said misclassification of a person's duties as long been a problem and one of the biggest points of litigation. The change in rules doesn't change the duties part of the law but the threshold for overtime.

“It has essentially been at the 23,000 mark for the last 40 years so it really was overdue for some doubling,” Garcia said.

Garcia said the Labor Department also changed structure of the threshold so it won't be another 40 years before it changes again. It will now always be 40 percent of all salaried workers pay. 

"Under the theory, that that threshold will stay generally in line with people who are considered professionals," Garcia explained.

Employer groups are not happy about the rules. They say they'll have to let workers go or change some employees from salaried to hourly.

But Garcia said that for some employees a change to hourly might work better anyway. He agreed that some employers might have to furlough workers, but others might hire more workers so they don't have to pay overtime or they may just pay the overtime. 

The rules do say that bonuses and incentives that are part of a contract agreement will be part of determining if a person's pay is within the threshold. 

 

Guests

Ruben Garcia, professor and labor expert, Boyd Law School 

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