President Obama Expands Overtime Protections
Are you entitled to earn overtime in California? Even if the answer used to be no, you may soon be eligible: New overtime rules will make overtime pay available to millions more workers.
If you work as a white-collar employee, your eligibility for overtime depends on how much you earn. Previously, office employees who earned less than $455 per week (or $23,660 per year) were automatically eligible for overtime if they worked more than 40 hours per week, regardless of their job duties or how they were paid. But this low wage cutoff left millions of employees out of luck, working long hours for very little pay, but still not entitled to overtime.
All that has changed now. The federal Department of Labor recently issued a final regulation changing the overtime wage cutoff. Starting in December of 2016, the wage limit will more than double. White-collar employees will be entitled to earn overtime when they work more than 40 hours per week if they earn less than $913 per week (or $47,476 per year). This will make more than four million additional employees eligible for overtime than the previous rules.
Who Are White-Collar Employees?
All employees are entitled to earn overtime when they work more than 40 hours in a week unless they fit into an exception to the law. Employees who fit into an exception are called “exempt,” and they are not entitled to overtime no matter how many hours they work. Many of the exemptions apply to relatively few workers. For example, employees who work on fishing boats, work at county fairs or other seasonal amusement businesses, or work as casual babysitters are not entitled to overtime.
By far the largest exemption categories are for white-collar workers: administrative, executive, and professional employees. If you work in an office or business environment (or do work other than manual labor) and your employer claims you are not entitled to earn overtime, chances are good that you are classified as a white-collar worker.
Other Eligibility Requirements
Even if you earn more than the wage cutoff, you may still be entitled to be paid overtime when you work more than 40 hours in a week. To be exempt from (not eligible for) overtime, you must not only earn more than the wage cutoff, but you must also meet these two additional criteria:
- You must be paid on a salary basis. In other words, you must be paid the same amount per week or month, regardless of how many hours you work or how productive you are. If your salary fluctuates depending on your attendance or performance, you are not paid on a salary basis – and you are entitled to overtime.
- Your job duties must fit within an exception to the overtime rules for administrative, executive, or professional employees. For example, if your employer claims that you are an exempt executive employee, you must be responsible for managing the entire business or a department or subdivision; you must regularly supervise at least two full-time employees; and you must have hiring and firing authority, or significant input into those decisions. (To learn about the job duties requirements for each of these exemptions, see Am I Entitled to Overtime Pay in California?)
Automatic Increases in the Wage Cutoff
To avoid having the wage cutoff amount outpaced by inflation, the Department of Labor’s overtime rule provides that the amount will be automatically adjusted every three years, starting on January 1, 2020. The amount must be equal to the earnings of the 40% percentile of full-time salaried employees in the lowest paid Census region in the country.
Special Rules for Highly Compensated Employees
Employees who earn at least $134,004 per year are generally exempt from (not entitled to) overtime if they perform office or non-manual work and perform at least one of the job duties required of an exempt white-collar employee. The job duties test for these well-paid employees is relaxed because it’s safe to assume that their high earnings more than compensate them for any extra hours they must put in. Before the new rule, the cutoff for these high-income earners was $100,000. This amount will also be adjusted automatically every three years.
California Rules Still Apply
The federal overtime rules apply to all employees. However, if your state law is more favorable to employees, you are entitled to the protections it provides. Generally when it comes to wage and hour laws, the law that gives workers the most protections is the one that applies, whether that law is federal, state, or local.
If you work more than eight hours in a workday or more than 40 hours in a workweek, your employer must pay you 1-1/2 times your regular hourly wage for each overtime hour you work under California overtime rules, unless you are exempt. And, your employer must pay you double your regular hourly wage for all hours you work over 12 hours in any workday and for all hours you work in excess of eight hours on the seventh consecutive day of work in a workweek.