Back in 2014, President Obama had directed Department of Labor (“DOL”) Secretary, Thomas Perez, to streamline and modernize minimum wage and OT exemptions. As a result of this direction, the DOL has finalized an OT expansion rule. Effective December 1, 2016, federal OT protections and regulations will expand to cover over 4 million people. What does this mean in a nutshell? That many more people will become eligible for OT and ultimately OT pay under federal labor laws.
How is this a game-changer for workers throughout the country? Before this OT expansion, if you were a salaried employee, you were only eligible for these protections if you made less than around $23,000 a year. That was a pretty low threshold. Now, with this current law the salary cap doubles at nearly $47,000. The new OT exemption guidelines even extend to highly compensated employees who make over $100,000 a year.
The OT expansion does not stop there. With the idea that salaries will only go up, the salary cap will be amended every three years to remain at the 40th percentile. Keep in mind this is a law not all encompassing and based on salary amount alone. Even if a salaried worker meets the cap, jobs that are primarily professional, executive or administrative in nature are still exempt.
California already has some of the highest protections for employees in the nation. This only strengthens the OT and minimum wage laws that exist in this state. With OT expansion laws going into effect this winter, it is very important that both employers and employees understand how this impacts their own situation. For more information it is very important to seek experienced employment law counsel in California.