Source: Dave Nagel / Getty
According to President Obama, 5 million more salaried workers may soon become automatically eligible for overtime pay. With the current state of the law, the only way you’re automatically guaranteed time and a half after logging 40 hours a week is if you earn less than $23,660 a year ($455 a week).
Later this week the Department of Labor will propose raising it to roughly $50,400 ($969 a week). The increase would only be the second one since 1975.
Also under the current version of the law, salaried employees who make over $23,600, but less than $50,000, are not eligible for overtime if they perform so-called “exempt” managerial duties. However, under the new rules, they will be.
Obama wrote in the Huffington Post that
“That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t,”
However, while advocates for the change see a big win for workers, the business community sees the issue differently. According to a report from the National Retail Federation, implementation of the new rules will cost retailers and restaurants millions of dollars and curtail career advancement for middle class workers, especially in rural states.
Also according to management-side lawyer with Littler Mendelson Tammy McCutchen, the change will require employers to reclassify millions of salaried workers as hourly workers which could cause them to lose some benefits.
The rule may mean more money for some of course, but for others it could mean their employers will insist that they not work more than 40 hours a week so they don’t have to pay them overtime.
The proposed rule changes which will be subject to public comment before being finalized.
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