New overtime rules starting December 1, 2016

President Obama signs executive order guaranteeing overtime pay for salaried employees.

The Detroit Free Press has reported that President Obama signed an executive order requiring businesses to pay overtime when salaried employees work more than 40 hours each week and earn less than $47,476 per year. The salary threshold rule had not been updated since the 1970s and was set at $23,660 per year.

Salaried employees qualifying for overtime fell from 62% in 1975 to about 7% now. More than 100,000 Michigan employees could be entitled to overtime pay later this year. The salary threshold will also be reexamined every 3 years and is expected to rise again in 2020.

We applaud President Obama for updating the salary threshold and protecting the middle class. It should also help individuals who are on Michigan workers’ compensation. Here is how the math works.

State Average Weekly Wage (SAWW)

Michigan employees who get hurt at work are supposed to receive 80% of their after-tax average weekly wage (AWW) if they are disabled. This weekly benefit is capped at a maximum of 90% state average weekly wage (SAWW) or $842 per week for 2016.

The goal is to limit weekly benefits to what most people in Michigan actually earn. This means high wage earners are limited to an arbitrary maximum payment regardless of their income.

Increasing overtime pay for salaried employees will have a positive impact on the SAWW. This means higher limits for individuals who get hurt on-the-job.

Sample Calculation

Mr. Smith is a machine programmer/operator from Warren, MI. He earns a salary of $75,000 per year. A 200 pound metal block falls off a machine and crushes his foot requiring him to miss 3 months of work. His average weekly wage is $1,442.30. The maximum amount he can receive from workers’ compensation is $842 per week. This represents a salary decrease of 41%.

Increasing the state-wide average weekly wage results in a higher maximum weekly comp rate for everyone. Just a $50 per week bump could put real money back into Mr. Smith’s pocket.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation today.

Related information:

2016 maximum weekly rate

Photo courtesy of Creative Commons, by free pictures of money.

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