On May 17, the White House issued a press release explaining that today the Department of Labor will finalize a rule expanding the conditions under which employers will be required to pay overtime to their employees.
“Overtime” is generally understood to mean that employees are paid one and one half times their usual hourly wage for hours worked in excess of 40 hours in a single work week. The new rule takes effect on December 1, 2016. The new regulations are not the result of any legislation passed by Congress. They are, instead, notes the White House statement, the result of President Obama having signed a memorandum in March 2014 “directing the Department of Labor to modernize our nation’s overtime rules.”
The new changes that will be put in place as a result of this “modernization” include:
• Raising the salary threshold at which companies can deny overtime pay from $23,660 to $47,476 a year, or from $455 to $913 a week.
• Extending overtime protections to 4.2 million additional (mostly white-collar, salaried) workers who are not currently eligible for overtime under federal law.
• Updating the salary threshold every three years.
• Raise the “highly compensated employee” threshold — above which only a minimal showing is needed to demonstrate an employee is not eligible for overtime — from $100,000 to $134,004.
The Obama administration claims that these changes will “Raise Americans’ wages by an estimated $12 billion over the next 10 years, with an average increase of $1.2 billion annually,” but that assertion does not take into consideration the wages lost because businesses that cannot afford to pay more in wages will be forced to lay off some employees or reduce the hours of others.
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