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Wage and hour: salary cap for overtime could be more than doubled

A huge federal discrepancy over paychecks and overtime in the United States means that many people who work and have worked overtime in the past will be getting much bigger checks in the near future. This is wage and hour issue is expected to be dealt with throughout the summer and into this fall.

A new U.S. Labor Department law would require employers and business owners to pay time-and-a-half wages for people who earn up to $50,440 and work overtime. Under the current law, employers and business owners do not have to pay overtime to salaried employees who earn more than $23,660. The president wants to double that cap, making nearly five million more people eligible for overtime pay. This includes more than 200,000 in Pennsylvania. In a statement, the U.S. Labor Secretary said that "Today, all too many managers are working hard and falling behind. They can barely make ends meet. They're caught in the middle class squeeze." He went on to say that it is unfair because "Managers open and close the stores, hire and supervise employees, stock shelves and clean floors right alongside their co-workers. They miss family dinners, they miss PTA meetings, they miss their [children's] sporting events and they make as little as $455 a week."

This newest change would affect workers in many types of jobs, including school workers, office workers, and healthcare professionals who do not receive overtime. This would put these types of workers in line with blue-collar workers who already have overtime protections put in place for them. The Labor Secretary cited an example, say that "A convenience store manager, fast food assistant manager or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay."

Democrats such as United States Senators Sherrod Brown of Ohio and Bob Casey of Pennsylvania said they welcome the rule change and think it is one more step in the right direction of income equality. Senator Casey said that "Too many Americans are working longer and harder without the overtime pay they earned." He added that "This executive order will have a substantial impact on wages for families across Pennsylvania and the nation."

One Republican who disagrees with the new proposal said this in response: "Just imagine how discouraging this rule will be to the working mother who can no longer negotiate her schedule to...work from home when she needs to, or to the young restaurant assistant manager who loses his title and is returned to an hourly job with no more pay, or to the job seeker who discovers that the only available jobs are part-time." He added that "What Washington owes to these workers is policies that create better opportunities, more flexibility and enable them to have more control over their work lives."

The National Retail Federation also vehemently disagreed with the policy. One lobbyist said "There simply isn't any magic pot of money that lets employers pay more just because the government says so...Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private sector entrepreneurs and job creators that are the true path to middle-class success."

Another lobbyist said that "Hard-working associates want to be classified as exempt because of the flexibility, incentive compensation, benefits and distinction that comes with such a designation." The Labor Secretary suggest that instead of paying overtime, companies cut managers off at forty hours per week and allow them to spend more time with their families. He also said that if managers who were going to be paid overtime were capped at forty hours a week, it could cause job creation where companies would hire others to pick up the slack. His reasoning was met with silence by his opposition. The rule was published on 1 July and will have a sixty day period where comments from both sides will be considered.

If you have wage and hour questions or feel you have been habitually underpaid for the work you do and the time you put into it, please call the Pennsylvania wage and hour attorneys at Goodrich & Geist today for a free preliminary consultation at 412-766-1455.

Source: Post-Gazette.com, "Could new rule mean overtime for more salaried workers?" 1 July 2015

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