New Overtime Rule

Begins December 1

Overtime must be paid to workers earning less than $47,476 beginning December 1.  Who does this apply to?  While there may be some exemptions in some trades like restaurant servers, it applies to virtually everyone in the HVACR industry.  For example: a salaried job superintendant who works 45 to 60 hours weekly but earns less than $913.00 per week.  They now must keep up with their hours and be paid overtime / time and a half.  This means that salaried workers who enjoyed the security of a salary rather than earning an hourly wage will now have to be paid overtime.  So, what will happen?  It seems obvious that salaried jobs will become less available.  After all, why guarantee a person a salary regardless of the work load when they can be paid an hourly wage and sent home when the work is slow.  It is a double edged sword.  You really can't have it both ways.  

We assume that some businesses created salaried positions in order to avoid paying overtime.  The business enjoyed the extra hours at a static pay and the employee earned the security of not being sent home when the work got slow.  

If our calculations are correct, $913 weekly is $22.82 per hour if the employee only worked 40 hours; but, as we mentioned, some salaried persons may work 45 to 60 hours weekly.  That would effectively lower their wage to $20.28 and $15.21 straight time respectively.  Since overtime now applies, the effective hourly rate would be $19.92 and $13.04 respectively.  Sure makes the previous salaried paycheck look a little lean.  That would seem to be the problem that the feds are trying to solve--  reducing the opportunity that employers have to take advantage of an employee by putting them on salary but demanding a heavy work load.  Of course the benefit of a salary should not be understimated.  A salaried construction employee gets paid rain or shine and that helps everyone's budget.  One can argue the benefits of both perspectives; but the bottom line is, beginning December 1, 2016, $47,476 is the threshhold.  If you pay less, the company must pay overtime.  Over $47,476, well, that is a negotiation between the employer and the employee.  Happy new federal regulation.