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The new federal overtime law

On Behalf of | May 26, 2016 | Employment Litigation

Cost of living in Texas and around the country is always a hot political topic in the media, particularly in regards to the federal minimum wage and overtime laws and how they affect both employers and workers. While it is probably true that most companies want to be fair to their employees, they must also consider how the rate of pay will affect the business’s ability to remain profitable. However, the federal government is making changes in federal employment laws, and employers will soon need to adapt accordingly.

According to the U.S. Department of Labor, the laws that affect overtime exemptions will go into effect on Dec. 1, 2016. While currently, those who make a salary of at least $455 each week, or $23,660 annually, are exempt from receiving overtime pay, the new rule raises that amount to $913 per workweek and $47,476 per year. However, an employer may count as much as 10 percent of the salary as coming from commissions and other incentive payments, as well as mandatory bonuses. These changes do not stop there because the law requires that they be assessed and, when appropriate, updated, every three years.

USA Today reports that experts believe companies may attempt to compensate for the new federal employment regulations in a variety of ways. For example, some may simply raise salaried employees’ pay rate and allow them to continue with the schedule they already work. On the other hand, employers may determine that it is in the companies’ best interests to make the move to hourly pay and/or cut back on the hours worked over 40 each week to limit the impact to their bottom line. Similarly, a business may forgo the overtime and simply hire a part-time employee to complete the duties. Not all businesses will be affected by the law, as some exceptions have been established.


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