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New US overtime regulations set to increase salary thresholds

New US Department of Labor regulations will raise the salary threshold for overtime eligibility, significantly impacting both employers and employees. The changes aim to ensure fair compensation and include more workers in overtime pay eligibility, fostering a healthier work-life balance and potentially boosting productivity and worker satisfaction.

JamieLee Watson
JamieLee Watson

JamieLee is Workable’s HR Advisor and in-house compliance expert.

New overtime laws for salaried workers have changed how overtime pay is calculated and who is eligible, impacting employers and workers.

These changes were introduced to address concerns about fair compensation for overtime work and to ensure that the law keeps pace with the changing nature of work and employment practices.

The US Department of Labor recently announced changes to the minimum annual salary threshold for overtime pay eligibility. These changes will be implemented in two stages. The first stage will take effect on July 1, 2024, when the threshold will increase from $35,568 to $43,888 per year. The second stage will begin on Jan. 1, 2025, and the threshold will rise to $58,656 annually.

This means that from July 1, 2024, to December 31, 2024, the threshold will be $ 43,888, and from January 1, 2025, onwards, it will be $58,656.

As a result of these changes, many workers and employers across the country will be impacted in significant ways. Let’s take a look at these changes:

1. More people are now eligible for overtime pay

This is because the eligibility threshold has been raised to include more workers. Previously, only workers who earned less than a certain salary threshold were eligible for overtime pay.

This threshold has been raised, which means that more workers, including salaried employees, will now be eligible for overtime pay if they work more than 40 hours per week.

2. The way overtime pay is calculated has changed

Previously, overtime pay was calculated based on a worker’s salary alone. Under the new regulations, overtime pay will be calculated based on a worker’s regular pay rate, which includes bonuses or commissions.

This means that workers who earn more than just a salary will now receive fair compensation for their extra work.

3. Employers are required to follow the new rules

This is not just a bureaucratic change, but a step towards a fairer work environment. It means they will need to update their payroll systems or adjust their contracts to comply with the latest regulations.

Employers who fail to comply could face penalties or legal action. The new rules are designed to ensure that all workers are treated fairly and that the law is being followed.

4. Workers stand to gain financially

The new regulations ensure that workers eligible for overtime pay will receive more money for their extra work, which can significantly boost their income.

This is a positive development for those who put in long hours and deserve fair compensation. It could also prompt employers to foster a healthier work-life balance, reducing the need for excessive overtime and improving employee well-being and productivity.

An opportunity for employers

The new regulations may require companies to make operational changes. However, this presents an excellent opportunity to improve work processes.

Companies may need to hire additional staff or adjust work schedules to avoid excessive overtime. Prioritizing employee satisfaction and engagement may also be necessary to retain their workforce, leading to significant shifts in work organization and management across various companies.

In summary, the changes to the overtime pay law will significantly affect both workers and employers. The new regulations aim to ensure that all workers are treated fairly and receive fair compensation for their extra work.

Employers who fail to comply with the new rules may face penalties or legal action. These changes may also bring about changes to the way companies operate and manage their workforce.

Disclaimer: Workable is not a law firm. This article is meant to provide general guidelines and should be used as a reference. It’s not a legal document and doesn’t provide legal advice. Neither the author nor Workable will assume any legal liability that may arise from the use of this article. Always consult your attorney on matters of legal compliance.

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