The Obama Overtime Law was put in place to protect employees who make under a certain weekly or annual threshold once they begin to work more than forty hours in a given week.
The Obama Overtime Law has an effect on everyone within a company whether you are exempt or non-exempt from the law itself, including executive, administrative and outside employees. Subsequently, it is essential to have a good grasp on what it means exactly, regardless of your status within your company. However, it is particularly important for those in a leadership role, human resources or employees that make under $40,000 per year and work more than forty hours a week regularly.
By understanding the Obama Overtime Law, employees can know exactly what they are entitled to if they work long hours. It also allows companies to know how to effectively manage the hours and overtime pay of their employees, ensuring they do not break any laws and treat employees in a fair manner.
In this review, we go over exactly what the Obama Overtime Law is and what it means for businesses and their employees. While many businesses may view the law as a hassle to deal with and causes increased expense, it actually is a great way for companies to ensure they promote a positive and fair work environment, which in return increases productivity within the company.
Now, let's dive into a complete overview of the Obama Overtime Law, including what it is exactly, how it affects employees and businesses and useful tips for managing hours and overtime pay in accordance with the Obama Overtime Law.
What is the Obama Overtime Law?
The Obama Overtime Law – otherwise referred to as the Fair Labor Standards Act(FLSA) – is a law proposed and put into place under the Obama Administration. The bill was crafted with the assistance of the department of labor, and its purpose is to establish which employees are eligible for or not eligible for overtime pay.
The Obama Overtime Law raised the salary threshold for overtime pay to $47,476 a year, or $913 per week. Prior to the Obama Overtime Law, the salary threshold for overtime pay was $23,360. Subsequently, millions of more employees inside the United States became eligible for overtime pay.
To be eligible for or non-exempt from the Obama Overtime Law, employees must make below the established salary threshold, receive a salary that has the capability of being changed and is in an executive, administrative, outside sales, computer, or professional role. Employees who receive a concrete salary that cannot be changed, such as those who receive tenure, make above the threshold or work in a capacity separate from the aforementioned are considered exempt from the Obama Overtime Law.
Needless to say, the Obama Overtime Law certainly had ramifications – most of which are positive. Employees are now more trusting of those in a position of leadership, particularly employees who understand the Obama Overtime Law. It allows employees to be fairly treated and compensated for their service, and employers have extra motivation to provide a healthy and fair work schedule for employees.
How the Obama Overtime Law affects employees
For most employees, the Obama Overtime Law is great news. It, for the most part, accomplished its goal of providing employees with an opportunity to receive additional compensation for work they complete outside of the regular forty-hour workweek. The typical rate for employees is 1.5 times what they typically receive hourly for every hour they work past the forty-hour threshold, although exact overtime rates may vary.
Also, many employees who are eligible for the Obama Overtime Law – meaning those who make less than $47,476 per year and meet the other necessary criteria – either saw their pay increased to meet the limit, their hours reduced to a more manageable forty hours or increased compensation in the form of overtime pay.
For employees that were not eligible for overtime compensation through the Obama Overtime Law – meaning those who made above the $47,476 threshold or were not eligible for other reasons – most likely did not see as much of an effect.
The only potential drawback to the Obama Overtime Law in practice on behalf of the employees is having to take more time to manage their hours and determine if they are being fairly compensated according to the guidelines set forth in the law. Then, of course, dealing with the boss in order to receive fair bonus compensation is an uncomfortable experience for some.
Another important note to keep in mind for employees is that essentially anything that is completed while in a work environment is counted, including even checking your email during a break. This is to avoid loopholes that allow employers to not count certain tasks in order to avoid paying overtime to employees who are entitled.
How the Obama Overtime Law affects businesses
The Obama Overtime Law affects businesses as well. In fact, it is far more important for businesses as a whole to be familiar with the law than employees. In other words, those in charge of payroll and hiring should know the law very well, which likely includes those in an executive or human resource position.
Businesses should put a plan in place to effectively track the hours of their employees, trying their best to either keep the hours at a reasonable rate or provide fair overtime compensation for those who over time and are non-exempt from the Obama Overtime Law.
Of course, there are more ways to handle employees who are non-exempt and work overtime frequently than to pay the overtime rate. Businesses also have the opportunity to cap the employee's hours at forty hours a week, plan for overtime pay, adjust the base rate of their salary and restructure the contract to where they are in a permanent position, entitled to pay regardless of performance.
The Obama Overtime Law should actually be viewed in a positive light by employers as it is a good guideline to follow in treating employees fairly. The better employees are treated the more productive they are likely to be and the better the overall work atmosphere is likely to be.
The best way to deal with the Obama Overtime Law is to communicate well with employees. Businesses should do their best to inform their employees, especially those who are non-exempt, of the law and how it will affect them if they were to work more than forty hours in a single week.
Tips for managing hours and overtime pay
The best way to deal with the Obama Overtime Law is to have a plan in place to properly manage employees who are required to work more than forty hours occasionally. The following are four useful tips for dealing with the situation and ensuring you follow the Obama Overtime Law with precision.
Understand budgets
The first step for most companies should be to consider the overall budget and how paying employees for their overtime work affects the bottom line. You should then consider setting aside a fund for overtime pay, reducing hours to avoid overtime pay or increasing base salary to avoid a shortage of available money for overtime pay at any given time.
Understand salaries
The fact is the primary goal of most businesses is to generate as much profit as possible. In order to do so, it is essential to understand salaries and come up with a plan to reduce the overall cost of your employees, while ensuring the Obama Overtime Law is followed. In many instances, it is better to increase the base salary than it is to pay for overtime work.
Non-exempt vs exempt
It is also essential to know what employees are non-exempt and which ones are exempt when preparing for overtime pay. The factors that determine which employees are eligible for overtime pay go beyond hourly, weekly or yearly salary and those in a position of leadership or who handles finance and payroll should know the factors that determine the eligibility status of employees.
State laws
The Obama Overtime Law is a federal law that takes precedence over state regulation. However, the exact overtime pay laws for each state vary, and it is important for employees and employers to know their own state laws as it relates to paying employees for overtime work, particularly as it pertains to the guidelines established in the Obama Overtime Law.
The bottom line
It is important to have a good understanding of the Obama Overtime Law to know how to deal properly with employees who work overtime hours. Whether you are an aspiring lawyer, business or employee of a company, taking the time to fully understand how the law affects you can only help. You can then use the information to make informed decisions that affect you, your client(if you are a lawyer) or your business. In general, the Obama Overtime Law is put into place with honest intentions, and it has had a positive impact on the way employees who work overtime hours frequently are treated within their place of work.