The Labor Department is doubling the salary threshold for what workers are allowed to make before qualifying for overtime meaning 4.2 million additional Americans will qualify for overtime pay later this year.
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More than four million workers will benefit from the new ruling Obama stated regarding overtime. For over 4 million workers, this change means they’ll either get a bump in pay or will get more time with their families if they work more than 40 hours a week.
JUDY WOODRUFF: Under the change, the salary threshold to qualify for time-and-a-half pay goes from $23,660 a year to more than $47,000. In recent decades salaries have risen and the number of workers eligible for overtime pay has plummeted from 62% in 1975 to just 7% now. The threshold would also be automatically updated every three years.
The new rule could affect people like Joanna Simmons, of Scottdale, Georgia, who now works as an administrative assistant. The new rule will likely have a disproportionate impact in many Montana work places, where the Department of Labor itself reports the annual mean wage for all occupations at around $40,600, far below the national average.
While the rule has drawn praise from some, critics say it will cost too much for employers, and could lead to layoffs and fewer hours for workers. “So for example you might have somebody who has a pay of $25,000 as an assistant manager and now they may be working 60 or 65 hours a week and not getting compensated for the overtime, the hours above 40”.
The Southeast will disproportionately feel the effects of the new rule because wages are lower here, Wright said.
But, when the rule comes into force on December 1, it is expected to raise the workforce cost for many businesses already facing pressure to increase their minimum hourly pay as well.
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She said business owners will be forced to cut jobs and turn others into hourly rather than salaried positions. She says the rule will be great for employees, especially managers who are overworked and underpaid. Business groups say, in fact, it’s going to hurt those very employees. “If you work overtime, you should actually get paid for working overtime”, he added. “Many salaried workers will be converted to hourly, and so they’ll lose certain benefits and prestige, and may view the shift as a demotion”, the expert explained.
