More than 4 million workers nationwide – many in the restaurant and retail industries – will become eligible for overtime pay under new rules issued Wednesday by the federal Department of Labor.
Under the new rules, first released in draft form last summer, the annual salary threshold at which companies can deny overtime pay will be doubled to nearly $47,500 from $23,660. That would make 4.2 million more salaried workers eligible for overtime pay. Hourly workers would continue to be mostly guaranteed overtime.
The new rules are expected to affect about 130,000 workers, or about 3 percent of workers, in New Jersey, based on earlier estimates. The federal Labor Department said the salary threshold has barely budged in the last 40 years, and the current $23,660 threshold covers far fewer workers, as a result of inflation. The threshold is below the poverty level for a family of four, the Labor Department said.
“For the retail and hospitality industries, this is a seismic change, it really is,” said Christopher Mayer, a management-side lawyer with McCarter and English in Newark.
Mayer said employers essentially have three options to deal with the new rules. For employees who already make close to the new threshold for overtime, employers could just bump up their salaries to the new number, and those workers would remain exempt from the overtime rules. For other employees, the employer could simply limit the overtime hours worked. That would likely force employers to hire more workers to cover the workload, Mayer said. Finally, workers making significantly less than the threshold could be switched from salaried to hourly pay, with the hourly and overtime rate set to provide about the same paycheck as the employee used to get.