Labor Laws: Overtime Pay
The new overtime FairPAY Rules are effective August 23, 2004
Under these new rules from the federal department of labor (DOL):
Almost All Employees Who Make Less Than $455 A Week ($23,660 A Year)
Are Eligible For Overtime Pay.
The new rule applies whether the employee is blue collar or white collar, or whether they supervise people of not. The exception for this rule is teachers, doctors and lawyers. They do not get overtime, no matter what they are paid.
Union workers covered by contracts will not be affected by the change.
IMPACT ON THE RESTAURANT INDUSTRY
Low-level and mid-level managers at restaurants who earn less than $23,660 a year will be newly eligible. However, employers can avoid paying them overtime by raising their salaries to the threshold amount.
Eighteen states — including Wisconsin, New Jersey, Oregon and Kentucky — have separate state laws protecting overtime eligibility. In most, employers must apply whichever regulation is more favorable to the employee. Legislative action is required in some states to make changes. Illinois became the first state to reject the new overtime rules.
The 474-page rules change means that millions of low-wage workers will get overtime and millions of others may lose it. The Labor Department states that the law affects only salaried workers; hourly workers should continue to receive overtime.
There is plenty of confusion with the DOL rules. Here are some important rules to know:
- The new benchmark allows employers to designate certain workers as administrative, executive or professional, and exempt from overtime only if they are paid at least at least $455 a week, or $23,660 a year not including bonuses or commissions.
- Any employee who earns more than $100,000 a year is not eligible for mandated overtime for any reason.
- Any employee who earns between $23,660 and $100,000 a year, and who is in most executive, professional, or administrative positions, is not eligible for overtime. This does not, however, apply to salespeople. They are still eligible. Sales staff that regularly work outside of the employer's place of business are not eligible.
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