Are you about to get a raise? New rule promises overtime pay for millions
President Barack Obama just gave around 4.2 million U.S. workers a raise.
The Labor Department on Wednesday issued a highly anticipated rule that mandates overtime pay for any full-time worker making less than $47,476 per year, doubling the previous salary ceiling.
Previously, only salaried workers making less than $23,660 or people working hourly jobs had been guaranteed overtime. Now, any employer with workers putting in more than 40 hours at salaries under $47,476 will be forced to offer overtime.
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The change affects a number of common U.S. jobs. Based on data from the Bureau of Labor Statistics, the average salaries of many teachers, janitors and construction workers fall under the new threshold.
The rule seeks to bolster overtime protections that have been eroded in recent decades by inflation. A diminishing proportion of workers have benefited from overtime regulations, which date to the 1930s and require employers to pay 1½ times a worker's wage for work that exceeds 40 hours a week.
In the fast food and retail industries in particular, many employees are deemed managers, work long hours but are paid a flat salary that barely exceeds the income of the hourly workers they supervise who receive overtime pay.
The White House estimates that the rule change will raise pay by $1.2 billion a year over the next decade.
"If you’re working overtime, you should get paid for it. We can’t allow folks with families to support to work long hours without being paid fairly for it," Vice President Joe Biden said in a pubic email. "It’s not right."
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Some employers, though, might choose to reduce their employees' additional hours to avoid paying overtime, thereby making the workers' schedules more consistent.
Business groups argued that the changes will increase paperwork and scheduling burdens for small companies and force many businesses to convert salaried workers to hourly ones to more closely track working time. Many employees will see that as a step down, they said.
Workers making more than $47,500 may still be eligible for overtime pay, unless they perform management, supervisory or professional functions — the so-called "white collar" duties test.
The liberal Economic Policy Institute estimates that 4.9 million people will become newly eligible for overtime, slightly more than the government's figure, and that an additional 7.6 million will benefit because they have previously been denied overtime pay as white collar workers. Yet with salaries below the new threshold, they will now have a stronger claim to overtime pay.
Additional reporting contributed by The Associated Press.
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Jason Abbruzzese is a Business Reporter at Mashable. He covers the media and telecom industries with a particular focus on how the Internet is changing these markets and impacting consumers. Prior to working at Mashable, Jason served as Markets Reporter and Web Producer at the Financial Times. Jason holds a B.S. in Journalism from Boston University and an M.A. in International Affairs from Australian National University.
