Change in rule for OT is set to take effect

COLUMBUS, Ohio — More than 4 million U.S. workers will become newly eligible for overtime pay under rules issued Wednesday by the Obama administration.

The rule, which takes effect Dec. 1, seeks to bolster overtime protections that have been eroded in recent decades by inflation. A diminishing proportion of workers have benefited from overtime regulations, which date to the 1930s and require employers to pay 1½ times a worker’s wage for work that exceeds 40 hours a week.

Vice President Joe Biden announced the changes at Jeni’s Splendid Ice Creams in Columbus, Ohio.

In the fast-food and retail industries in particular, many employees are deemed managers, work long hours but are paid a flat salary that barely exceeds the income of the hourly workers they supervise who receive overtime pay.

Under the new rule, released in draft form last summer, the annual salary threshold at which companies can deny overtime pay will be doubled from $23,660 to nearly $47,500. That would make 4.2 million more salaried workers eligible for overtime pay. Hourly workers would continue to be mostly guaranteed overtime.

The White House estimates that the rule change will raise pay by $1.2 billion a year over the next decade. Some employers, though, might choose to reduce their employees’ additional hours to avoid paying overtime, thereby making the workers’ schedules more consistent.

“Either way, the worker wins,” said Biden during a conference call with reporters Tuesday.

Business groups, however, argued that the changes will increase paperwork and scheduling burdens for small companies and force many businesses to convert salaried workers to hourly ones to more closely track working time.