In theory, overtime pay rules are straightforward: If you work over 40 hours in a week, you must be paid for the extra time at 1.5 times your regular rate of pay. This is basically how the rule works in both federal and New York law. However, there are exceptions, and these exceptions can be somewhat complicated.
These complications were at the heart of a recent court decision that blocked a Biden administration policy that would have given millions of Americans a pay increase.
When is an ‘exempt’ employee not exempt?
Certain kinds of positions — such as executive employees and outside salespeople — are exempt from these rules. Generally speaking, the overtime rules apply only to hourly employees. Most salaried employees are exempt from overtime rules.
That said, federal law provides that overtime pay rules do apply to salaried employees if their pay is below certain levels. Until earlier this year, the cutoff for most of these employees was around $35,000 per year. If they made more than that, they were exempt from overtime pay rules. If they made less than that, they were eligible for overtime pay rules.
The Biden administration enacted a new rule that was meant to raise this threshold. It worked in two stages. The first, which went into effect July 1, raised the threshold to $44,000 per year. The second stage, which was scheduled to go into effect January 1, 2025, was supposed to raise the threshold to $58,000. By some estimates, this would represent a pay raise for 4 million Americans.
Unfortunately for those workers, a federal judge struck down the Biden administration’s rule completely last month. This means the threshold for these workers has now dropped all the way back to $35,568 per year.
Protect your overtime rights
Whether they are exempt or not, many workers find that their employers are not paying them all they deserve. When this happens, they may need to take legal action.