Big Changes are Coming to Your Workplace

In a recent interview, billionaire Nick Hanauer said that when this change hits workplaces, “shit’s gonna hit the fan.” And I think he’s exactly right.

Right now, many employers pay their workers a salary and even if those employees work more than 40 hours a week, the employer doesn’t have to give them overtime pay. In order to do this, the employee in question must make at least $23,700 a year–anything less and the employer must pay overtime. Almost every salaried employee makes more than this, so there have been very few issues historically.

Under a new law that’s likely to go into effect in 2016, however, that salary floor is going to be moved to about $50,400 per year. Lots of salaried employees don’t make that much, so it’s going to be decision time for almost every business in America that has salaried employees who work more than 40 hours a week.

The first option is to give raises to salaried employees so that they all make at least $50,400 a year. Do this and you don’t have to worry about paying overtime.

If a company isn’t willing to do this, then it needs to have salaried employees who make less than the threshold start punching the clock to make sure that (1) they aren’t working more than 40 hours a week or (2) if they are, that the employer is paying them time-and-a-half for every hour more than 40.

As you can see, every business with salaried employees (unless they all make more than $50,000 per year) is going to be affected by this new rule in a major way. I’ve also done this long enough to know that lots of businesses are going to screw this up (or bury their heads in the sand) and find themselves on the receiving end of wage-and-hour lawsuits in the not-too-distant future. These lawsuits are particularly nasty because often times the damages are doubled or tripled and the employer has to pay their employees’ legal fees.

Businesses need to start planning for this change now. If not, don’t be surprised to see an attorney like me serving you with a lawsuit in a couple years for underpaying your employees.