by Chelsey Lucas
PRES. OBAMA’S PROPOSAL to make millions more full-time workers eligible for overtime pay has rattled plenty of employers. The rule more than doubles the salary threshold of eligible workers from $455 per week ($23,660 per year) to about $970 per week ($50,440 per year). The U.S. Department of Labor is accepting public comments (go to regulations.gov to submit) on the proposed overtime rule until Sept. 4 before making a final ruling, although no date for the decision has been made.
Labor and employment attorney Lori Hultman of Sarasota’s Hultman, Sensenig and Joshi, P.A., says employers need to prepare for the possible change and keep these points in mind: The salary thresholds are based on the standard 40-hour workweek, not pay periods; more than 40 hours per week constitutes overtime. If a DOL audit determines an employer is not paying overtime to entitled employees, the employer must retroactively pay for all the affected employees going back at least two years, as well as the employee attorney fees—even if the claim is found to be false.
Employers can respond in a number of ways, Hultman says. They may decide to reduce the hours employees work to avoid the 40-hour mark that kicks in time-and-a-half pay. Employers might hire people at lower rates of pay, so if it’s necessary to pay overtime it isn’t as costly, or they might hire two people for the same job so neither goes into overtime.
Any silver lining? When workers have more money, they buy more things. “Employers should understand that paying workers fairly is the right thing to do,” says Hultman, “and it should be better for business overall.”