Dayhoff Soundtrack: Washington Post: Millions more workers will be eligible for overtime pay under new federal rule

Friday, May 20, 2016

Washington Post: Millions more workers will be eligible for overtime pay under new federal rule

By Jonnelle Marte May 18, 2016 https://www.washingtonpost.com/news/get-there/wp/2016/05/17/millions-more-workers-would-be-eligible-for-overtime-pay-under-new-federal-rule/?wpisrc=al_alert-COMBO-economy%252Bnation

Labor Secretary Thomas Perez and President Obama will announce a new rule Wednesday that will expand the number of workers eligible for overtime pay. (Andrew Harrer/Bloomberg)

The Obama administration unveiled a new rule Wednesday that will make millions of middle-income 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 pay of 4.2 million additional workers.

The change is scheduled to take effect Dec. 1.

The move caps a long-running effort by the Obama administration to aid low- and middle-income workers whose paychecks have not budged much in the last few decades, even as the top earners in America have seen their compensation soar. The last update to the rules came in 2004, and Wednesday’s announcement is the third update to the salary threshold for overtime regulations in 40 years.

“Along with health care reform, this is one of the most important measures that the Obama administration has implemented to help middle-wage workers,” said Jared Bernstein, a former chief economist for Vice President Biden and a senior fellow at the Center on Budget and Policy Priorities.

The Obama administration will unveil a new rule that would make millions of middle-income workers eligible for overtime pay. Here's what you need to know about it. (Monica Akhtar/The Washington Post)

About 35 percent of full-time salaried employees will be eligible for time and a half when they work extra hours under the new rule, up significantly from the 7 percent who qualify under the current threshold, according to the Labor Department.

The shift was swiftly criticized by small business owners, nonprofit groups, and universities that say they may have to switch some salaried workers to hourly positions to afford the new threshold. And instead of seeing bigger paychecks, 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 of government relations for 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.”

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