Reworking Of The Overtime Rule Is On The Way

The overtime rule could be changing soon, affecting 4.2 million American workers and their employers.

Employers should take note of these developments and make the changes necessary. Though you may not need to make any changes just yet, rest assured the necessity will arise soon.

Here is an overview of what has happened so far with the overtime rule, and what is coming down the pike.

A Ruling Concerning Proposed Changes To The Overtime Rule

Per Nation’s Restaurant News, President Barack Obama envisioned significant changes to federal regulations governing overtime pay. His proposal was to increase the salary threshold of overtime exemption from $455 per week to $915 per week, which is a significant leap. This proposal was recently invalidated by a federal judge.

This isn’t to suggest that employers should sit back and breathe a sigh of relief. Though the proposed threshold was considered too high, it doesn’t mean that the issue is settled, or that overtime exemption won’t be going up. There is a looming change, though nobody knows exactly what it will be, and the labor department is already in the process of reworking the overtime rule.

Obama’s proposal failed to consider job roles and mostly relied on salary figures, which is one of the reasons it didn’t go through. Many employers also argued these figures were too high.

What Employers Can Expect Moving Forward

Regardless of the ruling, changes are coming for the overtime rule.

Some employers already shifted their overtime practices in preparation of the Obama-proposed revision. These were set to go into effect on December 1, but a last-minute injunction put it on hold.

Still, returning to old practices could be problematic due to administrative problems, confusion among employees, and issues concerning contracts. Those who’ve already made the shift probably won’t benefit from reverting. It’s simply not practical.

At this point in time, employers can still use the $455-per week threshold, so long as they’re abiding by state law requirements.

It isn’t necessary for employers to make any changes right now. But you should remain on the alert and be cognizant of what will be required of you moving forward.

What Is Fair For Employees?

Noticeably absent from this conversation on the overtime rule is a discussion on inflation, which continues to remain a contentious issue.

Some sources say wages are keeping pace with inflation. But most others note that wages have barely changed at all, and are anything but an inflation hedge.

Fair compensation isn’t just an issue of what is good now for an employee, but what is good for them long-term. It is also an issue of what they can comfortably live on, and whether they have the skills necessary to manage their money.

Financial education remains an important but often ignored issue as employees look to plan for their lives long term.

Final Thoughts

Salary is an important matter for employees and employers alike.

Naturally, employees want to be compensated fairly for their duties. Even if they don’t see their wages increase by large amounts, so long as there is a gradual increase over time, many will feel more satisfied, content, and secure.

Meanwhile, an increase in salary can make it difficult for employers to keep their profit numbers high. A rise in expenses generally means a decrease in revenue. Since this issue remains uncertain, there is also a certain amount of dread that could crop up.

Ultimately, the sooner the new requirements are revealed, the better. This will make it easier for employers to make the appropriate adjustments and plan for an increase in overhead. It is important for both sides to know what to expect, as this facilitates a more open and understanding work environment.