Millions more will be eligible for overtime pay
The Obama administration will unveil a new rule that would make millions of middle-income workers eligible for overtime pay, giving a victory to labor groups.
The Obama administration will unveil a new rule Wednesday that would make millions of middleincome workers eligible for overtime pay, a move that delivers a long-sought victory for labor groups.
The regulations, which were last updated more than a decade ago, would let full-time salaried employees earn overtime if they make up to $47,476 a year, more than double the current threshold of $23,660 a year.
The Labor Department estimates that the rule would boost the incomes of 4.2 million additional workers.
The move caps a longrunning effort by the Obama administration to aid low- and middle-income workers whose paychecks have not budged much in the past few decades, even as compensation for the top earners in the country has soared. The last update to the rule came in 2004, and Wednesday’s announcement is the third update to the salary threshold for OT regulations in 40 years.
About 35 percent of fulltime salaried employees will be eligible for time and a half when they work extra hours under the new rule vs. the 7 percent who qualify under the current threshold, according to the Labor Department.
The shift was criticized by small-business owners, nonprofit groups and universities, which say they may have to switch some salaried workers to hourly positions to afford the new threshold. And instead of earning more, some salaried workers may be assigned fewer hours, they said.
“For many of these types of employees, they’re going to be viewing it as a demotion,” said David French, senior vice president for government relations at the National Retail Federation. “They’re going to have to clock in and clock out. They’re no longer going to have flexibility at work.”
But some labor groups and unions said the change was long overdue.
Many people putting in 50 to 60 hours a week without overtime are actually earning less than the minimum wage when all of their hours are taken into account, they said.
“The current level isn’t even enough to keep a family of four out of poverty,” said Judy Conti, federal advocacy coordinator for the National Employment Law Project, a nonprofit organization that advocates for workers. “It is not at all reflective of somebody who is an executive or a professional.”
President Barack Obama announced his plans to update the rule two years ago, but some consumer groups say they have been pushing him to alter the rule since he took office. The change is to take effect Dec. 1.