More work, more pay? New rule extends overtime to millions

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COLUMBUS, Ohio (AP) - (05/18/16) - If you're a salaried employee come December your paychecks could see a boost.

Rules on who's eligible for overtime are expanding.

According to the U.S. Labor Department about 4.2 million Americans are impacted by the upcoming change including more than 100,000 people in Michigan.

The Obama Administration has been looking for ways to strengthen the middle class.

They feel too many people in certain salaried positions are being misused- working far more than 40 hours a week without receiving overtime.

The salary threshold to where companies can deny paying overtime is doubling- from $23,660 to $47,476.

"People are working more hours and they're getting paid the same," said Vanessa Nelson, a certified human resources expert in Mid-Michigan. "There hasn't been a change to the law in many, many years. When the law was first implemented it helped 62 percent of the people now it's only 7 percent. So they want to give that boost back to the people- to the employees."

Nelson helps companies understand and follow employment law.
She said the change to overtime rules means just about every business will need to review their staffing and finances.

"One of the things is you want to go through and review your compensation program and plan- and then you want to pull out the people that are in the gray area," Nelson said.

She said employers will want to look at job descriptions and duties of employees and make sure they're correct. She said companies will then need to make necessary decisions which could mean adjustments.

Businesses could choose to handle the new rule in a number of ways. Some may choose to raise their employees salary to the new threshold to maintain the overtime exemption status. She said some businesses may choose to keep employees at the same pay but start paying them overtime. Some companies could cut employees' base pay to offset the overtime, choose to reorganize work loads or potentially rely upon and hire more part-timers.

Nelson said communicating any changes to employees is essential.

Dawn Hughey, of Swartz Creek, went to Washington D.C. last year to help the Obama Administration learn more about the overtime issue.

Hughey at one time was a manager at a Dollar General store. Her salary was in the mid-30s and despite working 70 hours most week she wasn't getting overtime.

She advocated for change and thanks President Barack Obama for taking action.

"People are acting like these businesses are in financial trouble or will be because of this and that's nonsense," Hughey said. "If you look at what their stock holding are, and the raises and falls, it's not going to hurt them that much. It's going to make them treat their employees properly."

She said companies are still going to need managers to run day-to-day operations. She sees the upcoming change as a win-win for the middle class. She said for some it will mean being paid appropriately when they clock more than 40 hours a week. She said some employers will be forced to stick to a strict 40 hour work week for workers- giving individuals more time to enjoy their own lives and be with their families.

Some industry experts say the overtime change could hurt workers.
The Michigan Restaurant Association represents about 5,000 businesses. They said the changes are too much- too soon.

"It's a very low margin low profit industry. 4 percent on average is what restaurants can expect- which is why you see restaurants going out of out business," said Justin Winslow, president and CEO of the Michigan Restaurant Association. "It's a very, very competitive market- very difficult to sustain and make a good profit."

Winslow said restaurants will need to quickly adapt to the amount of hours their employees work and the amount of total labor in their establishments.

"That kind of upward mobility now is very much in question," Winslow said. "The ability to move into a salary position becomes in question as restaurants try and manage those costs increases. Businesses will do what they need to do to stay in business, and that will have a negative impact I think on some of these people who have moved up in this industry and made a real middle class living in it."

Winslow said the association plans to work with lawmakers to possibly make changes to the new overtime rule.

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