President Obama Strives to “Fix” Overtime: Employees Who Earn Over $450 a Week Will Soon Qualify

In a push to make the labor market fairer, President Obama recently signed a memorandum that will offer overtime to many employees who currently don’t have that protection.

The Department of Labor (DOL) will likely soon mandate overtime for workers who earn more than $450 a week (roughly $23,600 annually). This move could have far reaching effects, not only for laborers and employers, but also for consumers and the general economy. For one thing, analysts believe this change will boost payroll tax revenue. Critics fear, however, that it will put greater burdens on businesses that are already struggling, thanks to the new healthcare regulations. Here are some other likely implications of this new overtime paradigm:

• Employees who had previously been exempt from getting overtime will now be able to collect time and a half for hours worked in excess of 40 hours a week.
• Many employees will be excited to get extra income. However, some employers may simply slash hours, so they don’t have to pay overtime.
• The law will create procedural requirements for both employers and employees. Employers must be careful not to violate these overtime rules, unless they want to become defendants in wage and hour cases.
• Firms like Joseph & Kirschenbaum are leading the charge to protect workers and ensure that employers meet their wage and hour obligations. The movement is growing. The number of wage and hour cases has actually been shooting up — 2013 witnessed 10% more wage and hours cases than did 2012.
• The new rules could burden employers struggling with cash flow.
• Employees should make sure to track their hours meticulously and clock in and clock out.
• Start-up businesses may be challenged because businesses in initial growth and startup phases often keep labor costs to a minimum.
• Some critics fear that the overtime rules may be bad for consumers, because employers will just pass on the higher cost of labor in their products. But this view is naïve and misguided. It doesn’t take into account, for instance, the fact that wage earners also are consumers. If workers earn more money, thanks to overtime, they’ll be more likely to put that money back into the economy and thus fuel market competitiveness.

If you or someone you love has been struggling with a wage and hour issue — or any other employment issue, such as discrimination, harassment, or retaliation — the team here at Joseph & Kirschenbaum can provide a clear and confidential assessment of your case. Call us immediately at (212) 688-5640 to speak with us about your case.