The Obama administration unveiled a new rule that will make millions more American workers eligible for overtime pay. Starting Dec. 1, employees earn overtime if they make up to $47,476 a year, more than double the current threshold of $23,660 a year. This is a major victory for labor groups, considering the regulations had not been updated in over a decade. With these new changes in effect, the Department of Labor estimates 4.2 million additional workers will be eligible for overtime pay. Employers have a range of options to comply with the new rule:
- Pay time-and-a-half for overtime work
- Raise workers’ salaries above the new threadshold
- Limit workers’ hours to 40 per week
- Some combination of the above
Under the existing regulations, only seven percent of salaried workers are eligible, compared to 62 percent of workers in 1975. After Dec. 1, that number will increase to 35 percent. According to the Department of Labor, the revision also “strengthens existing overtime protections for 5.7 million additional white collar salaried workers and 3.2 million salaried blue collar workers.” Some small business owners have criticized the new measure, saying they may have to switch some salaried workers to hourly positions to afford the new threshold. For workers, this could mean fewer hours instead of bigger paychecks. Labor groups, on the other hand, have applauded the new rule. Employees who put in long hours without overtime could actually be making less than minimum wage when all hours worked are factored in. Visit the Department of Labor’s website to learn more about the new rule and how it affects businesses and workers.