If you're currently working in a salaried position making less than $47,476 per year, listen up. New overtime regulations that may change the numbers on your weekly paycheck have been postponed, but for some businesses, the ruling came after they had already made adjustments to accommodate the ruling, which was scheduled to take effect on Dec. 1. Regardless of how your business handled the transition, you need to understand what the change could mean for your paycheck.
But first, let's cover the news. According to The Washington Post, the federal court in the Eastern District of Texas issued an injunction this week that prevents the Department of Labor from mandating overtime pay for those who don't earn about $47,500 a year.
According to updated regulations released in May by the Department of Labor, more than 4.2 million Americans who had been previously considered "exempt" would be eligible to receive overtime pay for any hours over 40 worked in a week. The original deadline for that to roll out was Dec. 1, but the injunction changes that timing.
Under the current rules, salaried workers were only entitled to overtime if they made less than an annual salary of $23,660. Employees who made more than this amount were exempt from overtime, as were employees who were considered exempt based on their duties or position — for example those who perform high-level managerial work, sales outside of their home office, or other "expert" tasks.
This was to have been the first update to rules governing overtime since 2004. The new rule also included a provision in which the salary minimum point will be automatically updated every three years, "based on wage growth over time."
If the ruling had gone into play as scheduled
With the new regulation, that pay minimum would jump to $47,476 per year — or $913 per week -— regardless of an employee's job classification. There are still a few exempt positions, such as doctors, lawyers, teachers, police officers and first responders, but the majority of Americans would be covered by the new provision. And unlike laws that make exceptions for small businesses, this new regulation is not dependent upon your company's size.
There are a number of ways that your employer could have handled this and not all of them would add dollars to your bottom line.
Your employer could pay you overtime. This is the most straightforward approach to the new regulation. If you currently make less than $47,476 per year, your employer may opt to simply pay you overtime for any hours you work over 40 each week. If you regularly work overtime, this will mean more money in your paycheck.
Your employer could raise your salary. If your salary is close to the minimum threshold, your employer may opt to raise it above that amount, thereby making you exempt from overtime. You won't earn any overtime, but you will get a pay bump to compensate.
Your employer could limit your hours. Employers may decide to control costs by keeping a close eye on hours worked to make sure that their employees don't go over 40 hours each week. This may involve hiring more part-time staff or redistributing duties so that the same amount of work can get done without anyone receiving overtime. You won't see any extra dough, but you might have some extra time on your hands if you no longer need to work more than 40 hours a week.
Your employer could change your salary. It's a bit of a workaround, but your employer may opt to change your salary and make your hourly pay lower, therefore covering the cost of any potential overtime that you may earn. You won't make any extra money and will likely work the same number of hours that you did before.
If you're not sure how your company plans to handle the new overtime regulation, it's worth asking.
So now what happens?
The new regulation had been slated to go into effect on Dec. 1, but a coalition of states and business groups sued the government to push this date back and allow companies to phase in the regulations. Meanwhile, some businesses had already rolled out the changes for workers — and it's not easy to roll back any kind of pay raise.
As for what happens next on the federal level, there's plenty of uncertainty about if or how the newly minted Trump administration will handle it. On the campaign trail, President-elect Trump had indicated he wanted small businesses to be exempt from the ruling.
This story was originally written earlier in November and has been updated with more recent information.