Overtime wages can be very lucrative for workers, but they are also very costly for employers. If an employee puts in 40 hours in any given workweek, they should receive 150% of their typical hourly wage for any hours beyond the 40th. Many workers are eager to put in overtime, given the opportunity.
Some businesses crunch the numbers and reach the conclusion that paying overtime wages for some of their workers may be a more cost-effective solution than hiring additional employees. Quite a few companies, however, attempt to minimize or altogether avoid overtime wage claims. They must carefully monitor employee schedules to avoid overtime wage liability.
Often, overtime pay is available for hourly workers. However, sometimes salaried employees also qualify for overtime wages. Whether or not a worker is exempt from overtime payroll depends in no small part on the salary that they earn. A recent adjustment to federal salary requirements could lead to a drastic increase in wage claims over the next year.
The minimum salary has increased significantly
Companies must pay their workers a reasonable salary to demand overtime work without additional pay. Beginning in 2019, the minimum salary to exempt workers from overtime pay was $35,568. It remained stagnant for years. That changed as of July 1st, 2024.
New federal rules took effect on the 1st of July that increased the minimum salary for overtime wage exemption to $43,888. That is a significant increase, and another one takes effect at the beginning of 2025. Beginning January 1st, employees must make at least $58,656 to be exempt from overtime pay requirements.
Companies may not be aware of that change in policy and could unintentionally violate the rights of workers. Some employers may know about the change in law but may hope to avoid additional costs by not communicating that change to their employees.
Workers who qualify for overtime wages but do not receive them may need to pursue a wage and hour lawsuit against the company that employs them. Large groups of employees may all experience the same wage violations at a single company. They may be able to work together as they seek the overtime wages they deserve. Following changes in the law can help employees assert themselves when employers violate their rights.