The Obama administration has finalized a new overtime rule for workers that increases the threshold by which an employee is exempt from being paid overtime. The rule increases the previous threshold of $23,660 to $47,476 beginning on Dec. 1, 2016.
The administration estimates that 4.2 million workers nationally will now be eligible for overtime pay for any hours worked over 40.
The Ky. Chamber opposes the changes to the salary threshold and explained in formal comments to the U.S. Department of Labor (DOL) that 70,000 Kentucky workers would see themselves return to hourly work, and Kentucky businesses would endure a $19 million cost per year because of the change.
The U.S. DOL did slightly reduce the final threshold from the proposed level, but the threshold will be updated every three years to track salary changes and could increase to $51,000 on Jan. 1, 2020.
While several million Americans may become eligible for overtime pay, the DOL estimates that only about one fifth of those workers will see an increase in pay. In reality, employers and employees will lose flexibility as more strict time reporting is required. Some workers that benefit from working from home may lose that ability if they must punch a time clock, for example.
Retail and restaurant industries are expected to be the most affected, but it will also impact all private businesses, as well as government offices, nonprofits and universities.
The Kentucky Chamber also signed a letter of support for the Protecting Workplace Advancement and Opportunity Act filed this past March. If passed, the bill would stop the rule from having an effect.
The Kentucky Chamber urges you to contact your U.S. Senator and Representative and encourage them to support passage of the Protecting Workplace Advancement and Opportunity Act to protect employers from the DOL’s ruinous proposed overtime regulation