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New overtime law impacting millions of workers goes into effect Dec. 1

INDIANAPOLIS, Ind. – A new federal law goes into effect on Dec. 1st that could potentially affect millions of workers across the U.S.

Businesses have been scrambling to prepare for the onset of the Fair Labor Standards Act, which changes the threshold for overtime pay to $47,500. Salaried workers who make less than that are eligible for overtime pay when they work more than 40 hours in a week.

As the rules currently work, companies can avoid paying overtime to full-time salaried employees making as little as $23,660 by classifying them as “exempt.” Those workers aren’t entitled to overtime pay even if they work more than 40 hours a week.

The law that goes into effect on Dec. 1 changes that. The White House said the 40-hour workweek has eroded over the years, with workers putting in more hours without being compensated for them.

What does that mean for companies? They’ll have to anticipate higher payroll costs, either by paying out more in overtime or raising the salaries of employees so they hit the $47,500 threshold to become exempt employees.

Companies could also make changes to paid time off, bonuses and incentive plans to compensate.

In Indiana, the law is expected to affect nearly 250,000 workers.

The salary threshold will be updated every three years. Based on projections, it is expected to rise to $51,000 by January 1, 2020, after the first update.

4 comments

    • Brian

      Full-time salaried employees making $23,660 by classifying them as exempt is absurd. Companies having these people work 50 and 60 hours week for that pittance is a disgrace. Now whether these companies go along with the new act or they cut these workers hours down to 40 is yet to be seen. Obamacare was supposed to cure all ills with Healthcare by including all workers down to the 30 hour mark and all that companies did to side step that was to cut workers hours to below 30 a week. As with most Liberal legislation, it is supposed to mean well, but they never look at the consequences except through rose colored glasses and never even fathom what the negative effects could be.

  • Metal Maniac

    As someone who was taken advantage of for overtime, they can classify you whatever they want but it has no legal standing. You can call a Janitor a CEO but that doesn’t change what the Janitor does. Know your rights people!

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