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Will the salary exemption affect holiday workers this year?

U.S. retailers will soon hire tens of thousands of temporary workers for the holidays. While many will be hourly employees, low-level managers will likely be affected by a recent federal court ruling. Essentially, these employees may not enjoy the possibility of mandatory overtime pay under federal law.

Last year, the Obama administration proposed an increase to the salary exemption to $913 per week (which amounted to $47,476 for most full-time employees). Hourly employees making less than this amount would be entitled to overtime pay (i.e. time-and-a-half) after exceeding 40 hours in a work week.

The rule was proposed in part because scores of low-level managers making less than $40,000 were classified as salaried employees, even they routinely worked more than 40 hours per week without overtime pay. As such, they earned only slightly more than minimum wage despite the additional work hours.

The Department of Labor adopted the rule and it was implemented last December.

A number of trade groups and 21 state governments disagreed with the increase and sued the administration. A federal district court judge in Texas recently struck down the exemption rule, reasoning that it would cover too many management level employees who were supposed to be exempt from hourly wage requirements. The court also noted that overtime eligibility must be based on a combination of workers’ duties and wages.

With nearly 11 million workers to be affected, it remains to be seen how employers will handle the decision. If you have questions about whether you should be eligible for overtime pay under state or federal law, an experienced employment law attorney can advise you.

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