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4 Ways New Overtime Law May Affect Your Paycheck
Updated May 19, 2016 6:44 AM
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(UNDATED) - Thanks to a major change in federal rules, millions of employees around the country will now become eligible for overtime pay.

Everyone's first assumption is that the rule change will mean bigger paychecks. But that may not necessarily be how it plays out for everyone.

Today, the only way you're automatically eligible for time-and-a-half pay when you put in more than 40 hours a week is if you earn less than $23,660 a year ($455 a week). But effective December 1, 2016, that threshold will rise to $47,476 ($913 a week).

One of four changes could occur if your pay falls between the old and the new threshold:

  • You'll start getting overtime: Right now, if you're a salaried worker who makes between $23,660 and $47,476 and have some managerial duties you are considered "exempt" from overtime pay. Under the new rules, such low-paid managers would be reclassified as "non-exempt." That means, when they work more than 40 hours in a week they must be compensated at time and a half. It also means you and your employer will have to keep close track of their hours.
  • You'll get a small raise. If you earn just under the new threshold, your employer may decide to just raise your base pay by a few thousand dollars to avoid having to pay you overtime, said Tammy McCutchen, a management-side lawyer with firm Littler Mendelson.
  • No more pay, but your hours could be limited. If you regularly work long hours but don't get paid overtime today, and your status changes to "non-exempt" under the new rules, your boss might not let you work more than an 8-hour day to avoid having to pay you overtime.
  • No more pay, but you still work long hours. Even if you become eligible for overtime, you may still end up working long hours but not get paid a dime more, because your employer could lower your base hourly pay to offset any overtime you'll be owed.


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