On the near horizon: new federal overtime rules affecting millions

Say that you’re an “exempt” worker toiling diligently on behalf of a California employer. Although that classification is not readily susceptible of a quick and easy definition, it broadly applies to certain categories of salaried — rather than paid-by-the-hour — workers.

One straightforward and representative take on exempt employee status is supplied in an online primer noting that, “The most common exemptions are the white-collar exemptions for administrative, executive, and professional employees, computer professionals, and outside sales employees.”

A defining characteristic of exempt status is that an exempt worker does not qualify for overtime pay, being deemed a salaried worker.

A new federal law that kicks in from December 1 of this year mandates that a currently exempt worker making less than $47,476 be reclassified as a non-exempt worker, meaning that hours worked in excess of 40 a week be compensated with time-and-a-half pay.

Everyone similarly situated gets a raise, right?

Not exactly.

Some will, of course. In select instances, though (namely, when an employee’s current salary is close to the above-cited amount), an employer might logically opt to simply give that worker a raise to put his or her wage above that threshold amount. The result: A small outlay for the employer, with many thousands of dollars potentially saved through avoidance of overtime payments.

Other outcomes could also ensue. An employer might simply cut back a worker’s hours, of course, to avoid paying overtime pay. Or an employer could cut a worker’s hourly pay rate to effectively make up for any overtime pay spent on that employee.

Is that latter move legal? Although it “may feel all kinds of wrong,” notes one media story discussing the upcoming overtime changes, an employer is good with the federal government so long as it pays at least the minimum wage mandated under federal and state laws.

Assuredly, there will be questions and, in some instances, employment litigation focused upon the soon-to-be altered federal law. An employment law attorney well-versed in wage-related matters can respond to an employer’s or worker’s concerns.