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12/7/16 - An Obama administration policy that would have given more white-collar workers overtime pay starting December 1, was blocked nationwide by a federal judge in Texas. The Department of Labor filed this week its official Notice of Appeal.
The new legislation would provide overtime pay to more than 4 million low paid managers, who currently don't qualify for that. At the moment, under the FLSA, if an employee makes at least $23,660 per year - or $455 per week - their employer doesn't have to pay them overtime. The new policy would raise that bar to $47,476 annually or $913 per week for a full time worker. As a result of the court's ruling, this new salary threshold will not become effective on December 1, 2016. 
Although the Labor Department filed an appeal, changes to the existing policy face an uncertain future under the Trump administration and the Republican controlled congress. 

What is Overtime Pay?

Overtime Pay is the cash compensation for the hours eligible employees work in excess of 40 hours in a workweek (a workweek = 7x24= 168 hours). According to the Fair Labor Standard Act (FLSA ) the overtime pay rate for eligible employees is one and one-half (1.5) times their regular working hour rate of pay.

For example: if you earn $20 per hour your overtime pay rate, if you are eligible, must be at least $30 per hour:  $20 per hour x 1.5 = $30 per hour.

Normally overtime pay earned in a workweek must be paid on the regular payday for the pay period in which the wages were earned.

If you are a tipped worker you should keep in mind that your regular pay rate can never be less than the applicable minimum wage-rate.

For example: an employer pays tipped workers the current federal minimum wage of $7.25, which is broken in $2.13 cash wage and a tip credit of $5.12 per hour.
The employer should calculate the overtime rate for the tipped worker not by multiplying the cash wage of $2.13 by 1.5 but by multiplying the minimum wage of $7.25 by 1.5 and then subtracting the hourly tip credit of $5.12.

Incorrect Calculation: minimum cash wage $2.13 x 1.5 = $3.20 per hour
Correct Calculation: federal minimum wage $7.25 x 1.5 = $10.88 - federal tip credit $5.12 = $5.76 per hour

Please keep in mind that many states have tip credit laws that are stricter than the federal FLSA.

Workweek Definition for Overtime Pay

The federal act defines a workweek as 7x24= 168 hours, but the law doesn't provide:

  • a standard workweek from Monday through Friday from 9 to 5. An employer can start your workweek  any hour of any day. Your workweek could even differ from your colleagues. 
  • overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime hours are worked on such days.
  • extra pay for working weekends or nights - that's a matter of agreement between you and your employer, unless overtime hours are worked during weekend and nights
  • overtime pay for standby duty, such as carrying a company cell phone, unless the employer imposes additional restraints such that youcannot effectively use your standby time for personal use
  • rules to limit mandatory overtime (see below)

Mandatory Overtime

The federal act doesn't limit the total number of hours worked in overtime, which is the case under child labor laws. Employers may force workers age 16 and over (18 and over for hazardous duty) to work mandatory overtime hours. This is of course paid in overtime for eligible workers, but the long term effects of overtime leading to fatigue, diminished quality of work, errors or near mistakes.
Some industries, for instance airlines and trucking industries have limited the hours of work for pilots and drivers. For nurses the Safe Nursing and Patient Care Act of 2007 is still pending. But as a result some states have enacted or are considering overtime laws for nurses.

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