If you have been in the workforce for any length of time, you have probably realized that some people are paid hourly and some are paid a salary.

If you are hourly, you get paid based on the hours that you work.  If you work 10 hours and your hourly rate is $18, you would have made $180 (before taxes).

In most cases, if you work over 40 hours per week, the additional hours are at an overtime rate.  Generally, this amount is equal to time-and-a-half.  To put it another way, you'd get $27 per hour instead of $18 per hour.

Salaried workers are paid the same amount each week, regardless of how many hours they actually work.  Well, sort of.

If your salary is high enough for you to be an 'exempt' employee, you get paid the same amount of money each week, regardless of the number of hours you work.  It doesn't matter whether you end up working ten hours or seventy. You bring home the same amount.

However, if you do not make enough money to meet the exemption threshold, you are considered 'non-exempt'.  That means that you are entitled to get overtime pay for any hours you work above 40 hours in a given week.

According to the Department of Labor website, any employee who is currently making under $35,568 per year is eligible for overtime pay.

On July 1, 2024, that number will jump to $43,888.

On January 1, 2025, anyone making under $58,656 will be eligible for overtime pay.

Why the change?

In recent years, we have seen the price of nearly everything skyrocket.  The cost of some goods and services has increased by 50% in the last two years.

It is making it difficult for those on the lower end of the exemption range to make ends meet.  And since they are exempt, they are not eligible to get additional pay from their primary job.

Yes, many of these individuals have gotten second jobs or created side hustles. But this is not always possible.

The DoL website said, in part:

The department’s new overtime rule was developed based on almost 30 listening sessions across the country and the final rule was issued after reviewing over 33,000 written comments. We heard from a wide variety of members of the public who shared valuable insights to help us develop this Administration’s overtime rule, including from workers

Unfortunately, it is likely that some small businesses will suffer because of this regulation change.  We may see some businesses with narrow margins make changes in how they operate.

Only time will tell.

You can get additional details about the change HERE.

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Gallery Credit: Stacker

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