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New Overtime Pay Changes Could Affect Millions of American Workers


 

Big changes may be on the way for North Carolina businesses and employees. On June 30, 2015, The Federal Department of Labor announced through its website plans to modify the rules governing employees’ eligibility for overtime pay; changes that could offer overtime protections to “nearly 5 million white collar workers within the first year of its implementation.”

Originally designed for “well compensated professional employees”, the current guidelines prevent those performing primary occupational duties described as either “executive,” “administrative,” or “professional” from receiving overtime compensation if they are paid more than $455 per week. Yet due to the outdated nature of the guidelines, some employees making as little as $23,660 per year are oftentimes unable to receive overtime compensation. For an overview of various overtime exemptions, including those for executive, administrative or professional employees, review our blog entries located here or here.

The modifications, likely to take effect in 2016, will increase the pay threshold for meeting the exemption to approximately $50,440 per year. Importantly, this new rule will contain a “mechanism to automatically update the salary and compensation thresholds on an annual basis using either a fixed percentile of wages or the Consumer Price Index for Urban Consumers.”

In addition to modifying the rules for executive, administrative, and professional employees, the proposed rules will change the requisite salary of a “highly compensated employee” from $100,000 per year to $122,148 per year, approximately the 90th percentile for full-time salaried employees. For more information on highly-compensated employees, review our blog posting located here.

Both employers and employees should pay careful attention to these proposed changes as they develop, as employers who violate these labor and wage laws may be subject to heavy penalties. The labor and employment attorneys at Maginnis Law, PLLC assist employers across the state in ensuring compliance with federal and state wage and hour laws. To speak to an attorney about any labor or employment issue, contact Karl S. Gwaltney at 919.480.4067 or through email at kgwaltney@maginnislaw.com

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