New Overtime Pay Rule May Affect Millions of Healthcare Workers
On May 18, the U.S. Department of Labor issued a final rule that doubles the salary threshold under which most employees are guaranteed overtime pay. Effective December 1, 2016, employers will be required to pay 1.5 times the regular salary for work past 40 hours per week if an employee's annual salary is less than $47,476; raise the employee's salary above the new threshold; limit the employee's work hours to 40 per week; or implement some combination of all three options. This new threshold will be automatically updated every three years.
This rule is expected to affect a total of 4.2 million workers across the country—including 100,000 in Michigan—who will either qualify for overtime pay or get a raise to the new salary threshold. Within the healthcare profession, nurses, medical and physical therapist assistants, and medical and pharmacy technicians are among those likely to be most affected, as reported by Modern Healthcare.
While this new rule means bigger paychecks for employees, it means higher costs for employers. In an interview with Michigan Radio, the Michigan Chamber of Commerce said this could result in some employers reducing salaries to absorb the extra overtime pay, or moving salaried workers to an hourly status. The Michigan League for Public Policy, however, says this change to the current rule, which has only been updated once since the 1970s, is long overdue and will help some households, such as those with two working parents, make ends meet.
Click here for an overview and summary of the final rule. For more information, visit the Department of Labor's website.