What are the new proposed overtime rules in California?

The wait is finally over!

The Department of Labor (DOL) has introduced new overtime rules in California. The new rule system can make many more Americans eligible for overtime and thereby can cause a hike in the cost of the employers.

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Illustration for article titled What are the new proposed overtime rules in California?

These new proposed overtime rules have received a mixed response from the people and while some of the people are appreciating these proposed overtime rules, on the other hand, some are not on acceptable terms with them.

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What is the current law situation?

Under the current law situation, the employees with salary less than $455 per week or $23,660 annually are eligible to be paid for overtime, if they are working for more than 40-hours in a week. On 7th March 2019, DOL introduced new rules, which were long waited for quite some time. These new rules defined rescind the rules defined in the year 2016.

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The current proposed law:

Now, with the recent proposed overtime rules, the standard salary to be considered for overtime pay has been revised to $679 per week or $35,308 per year. The overtime eligibility of employees getting salary more than this would be decided on the basis of the job duties and responsibilities.

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During the development of these overtime rules, DOL received active participation in the six in-person listening sessions, which were held around the nation. All the people who participated or commented in these sessions agreed on the terms that the present overtime rules should be changed or updated for the betterment.

What are the changes proposed in these new rules?

With these proposed overtime rules, these are some of the major changes which are made:

  • The basic salary will be eligible to be paid overtime for has been revised. The salary which was earlier $455 per week is now $679 per week
  • These rules also made an increase in the total annual requirement for compensation available for the highly compensated employees from the present limit of $100,000 to the new limit of $147.414 per year
  • It also made periodic reviews necessary after every 4-years for the regular update of the salary threshold
  • It also opened provision for employers to make use of the non-discretionary bonuses along with the incentive payments and commissions, paid annually or on a frequent basis, for the satisfaction of 10% of the standard level of the salary
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The following impact of these new proposed rules:

As the following impact, these proposed overtime rules would open the bracket for a million Americans to be eligible for overtime. With this increase in the number of employees eligible for overtime, the employer would have to deal with a cost hike for their working.

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The impact of these new rules has also made many employers revise or audit the entire workforce to carefully analyze and identify which employees would require adjustment or reclassification of their salary under these new regulations of laws.

These are the people who will face the major impact of these rules:

  • Employers who are working with more than 20 employees
  • HR professionals
  • Owners of small businesses
  • Compensation professional
  • Professional of Taxes
  • Accounting managers
  • Professionals of compliance
  • Professionals handling the accounts
  • Office managers
  • Payroll professionals, etc.

Overall, many people are seen satisfied with the proposal of these new rules for overtime. What are your opinions about these proposed overtime rules? Please comment below and share.

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Also, if you need any further information or want to share an update on the topic, then please do get in touch with us by writing below. We would love to hear from you.

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