Overtime Regulations: Are You Ready for the Big Pay Change?

Is your business actually ready for the new overtime regulations that would raise the salary limit below which employees would qualify for overtime?

A lot of business owners complain that the new overtime rules in the U.S. would put a significant strain on their budgets, as more workers would automatically qualify for overtime once those regulations take effect.

Our employment law attorneys here at the Rager Law Offices have good and bad news for you. The good news is that you don’t have to make major changes in your company’s policies just yet, as the new overtime rules were suspended last year (they were supposed to take effect in December 2016).

But the bad news is that the Department of Labor is actively appealing the suspension, and they seem really determined to actually implement those major overtime regulations.

So you might want to consider whether or not you’re ready for the new overtime rules that may come into effect soon (or not).

What would new overtime rules bring?

Under current overtime regulations, employees earning less than the minimum income ($455 a week) are eligible for overtime pay.

Under new overtime rules, the minimum income would be raised to $913 a week, meaning many more salaried employees would be eligible for overtime. For the sake of comparison, $455 a week is $23,660 annually, while $913 a week is $47,476 annually.

What the new overtime regulations mean is that salaried employees earning less than $913 a week would have to receive pay for hours worked over 40 hours in a week.

Note: the overtime rules change would not affect executive, administrative, and professional employees whose weekly income exceeds $913, as they would still be exempt from overtime.

If this sounds confusing and the overtime rules don’t make sense, consult our employment law attorney to have a better understanding of what those new overtime regulations would mean for your particular business.

Call our Los Angeles offices at 310-527-6994 or fill out this contact form today to schedule a free initial consultation.

How overtime would be calculated under new rules

Let’s say you have an employee who works 45 hours in a workweek. What would be his total pay for the week and would he qualify for overtime if he was paid $12 per hour?

The formula to calculate total pay for the week is as follows:

• Regular pay rate $12 x 40 hours = $480, plus


• Regular pay rate $12 x 1.5 (overtime) x 5 hours = $90, equals

Total pay for the week: $570.

Under current overtime regulations, the employee would be exempt from overtime as his weekly income exceeds $455. Meaning: he wouldn’t get those extra $90 under current rules.

Under new overtime rules, the employee would qualify for overtime, as his weekly income ($480) is way below the proposed minimum income of $913.

Would the new overtime rules put a strain on your budget? They might. However, do keep in mind that some employees are considered to be exempt from receiving overtime pay.

While you don’t necessarily need to change your company’s policies now that the new overtime regulations have been suspended, it would be a good idea to introduce certain changes in order to prevent the new rules from exhausting your company’s budget.

Contact our Los Angeles employment law attorney to discuss your best options and become better prepared for new overtime regulations. Call us at 310-527-6994 or fill out this contact form for a free case evaluation.