Q. If I get paid a salary rather than an hourly wage, does that mean I won’t be eligible for overtime if I earn more than $47,476? A study published by the National Bureau of Economic Research in 2014 examined worker happiness in Japan and South Korea, each of which instituted a 40-hour workweek by imposing strict overtime regulations.
Advertisement
The White House claims the rule change is a win-win for workers that will cause employers to react in one of three ways (see video below): either they will choose to pay overtime rates, give managers a raise so that they make $47,500 or more to avoid paying overtime or reduce the number of hours an employee works. “Senator Scott and I have introduced legislation to block this rule and ensure the administration can not create a future rule without first doing a full, accurate economic study on its impact-in particular on small businesses, nonprofits, and colleges and universities around the country-a common-sense step that should have happened in the first place”.
The number of employees who are now misclassified might be higher than the government lets on.
Let’s start with incomes: many low-wage workers already work more than 40 hours in a week, and the restored threshold is an obvious win for these workers.
But the New York City comptroller’s report notes that if employers cap the work week at 40 hours, employees’ base salaries will remain constant and they won’t be expected to work additional hours without pay. That would make 4.2 million more salaried workers eligible.
The new rule is meant to boost earnings for middle- and lower-income workers, Perez said, which have been stagnant since the late 1990s. According to the DOL’s numbers, 2.3 million women will be eligible for these new protections compared to 1.9 million men. Of those, 4.4 percent – of 184,792 workers – are in Pennsylvania. Non-white workers too will be impacted.
“Are you going to pay overtime for that or are you going to have some limits on overtime?” she said of employers.
All the same, the change has not been received well by some business communities.
David French, senior vice president for government relations at the National Retail Federation, called the new rule a “career killer”. There are, however, some professions-including teachers and contract lawyers-that have different regulations regarding their compensation.
But some labor groups and unions said the change was long overdue. The rule change will affect businesses like restaurants, retailers, landscapers and moving companies.
The action raises the pay threshold below which employees must be paid overtime wages after working 40 hours a week. So even if the naysayers do what they warn, it could end up having a positive impact on US employment.
Q: How easy will it be to track employees’ hours?
This has been one of President Obama’s biggest agendas for the last few years. The overtime rule has not been changed since 2004, meaning employee wages fell behind as the economy changed and the price of living rose. However, the rule will adjust the threshold every three years to that percentile, and the White House on Tuesday anticipated that by January 1, 2020, the cutoff would be around $51,000.
“One of the many Americans who has been working hard but struggling to keep up is a single mom from Tucson, Arizona, Elizabeth Paredes”, Democratic President Barack Obama wrote in an email to petitioners.
An issue for NCAA Division I athletics departments is that this new expense is coming on the heels of a series of changes in NCAA rules created to increase benefits for athletes. “That just doesn’t seem like it is consistent with the Fair Labor Standards Act“. So Elizabeth wrote to me to say how hard it is to build a bright future for her son.
Advertisement
The new rules will take effect on December 1, 2016, giving employers about five and a half months to make necessary preparations.
