What the New Proposed Overtime Rules Mean for Workers

In 2014, President Obama directed the Department of Labor to update the threshold under which all workers are eligible for overtime pay. Today, the Department of Labor announced that it will raise the overtime salary threshold from $23,660 to $50,440 by 2016. The threshold will also be indexed, guaranteeing that the law’s important protections will not be diminished by inflation.

We applaud President Obama and Secretary Perez for this bold action. The new threshold will protect more workers from being taken advantage of by their employers, giving some higher pay for working overtime and others reduced hours without any reduction in pay. This is a significant victory for American workers and will ensure that they get paid for the work they do.

This higher threshold will guarantee 15 million more workers overtime pay on the basis of their salary alone, in addition to the 3.4 million workers who are already guaranteed overtime pay. It will boost wages, which have been largely stagnant for the past 35 years, create hundreds of thousands of jobs, and give more family time to millions of working parents. Overall, 3.1 million mothers and 3.2 million fathers will be guaranteed overtime pay under the new threshold, and 12.1 million children will benefit from their parents’ overtime coverage.

In 1975, the overtime salary threshold covered about 62 percent of all salaried workers–today, it only protects 8 percent. Had overtime kept pace with the 1975 level, it would be about $52,000 today adjusted for inflation, about equal to the U.S. median household income. The new salary threshold puts us back on track to reconnect workers’ wages with gains in productivity.

With today’s announcement, the DOL is opening a comment period that will give workers an opportunity to express their support of the proposed rule change. FixOvertime.org allows workers to use their voice and submit their comment for consideration as the Department of Labor decides whether or not to actually boost overtime in accordance with the proposed rule changes. It also lets workers calculate how much extra they can earn per week under the new overtime rules.

  • Charlie Bennefield

    All employer will just hire others and drop peoples hours. Those HR departments have been trained to get around labour laws, they always have and all ways will be budget pinchers.

    • Not me

      What you have just said is PRECISELY the idea of the increase:

      It will boost wages for some workers, because they will be paid overtime, though most likely fewer overall than they are working – FOR FREE – now. In other words, many salary workers paid more than the current threshold, but less than the new one, will see one change, a POSITIVE ONE, they work less hours, yet would be paid the same amount, and would have help. In some cases, those workers who are working a few hours a week, or only periodically, will continue to do so, but now will be paid for that time at a rate of 1.5 times their basic salary divided by 52 weeks and 40 hours.

      It also will create hundreds of thousands of new jobs, even if many are only part time, because in many cases, hiring a second employee, has a lower overall cost than paying one person time and a half, and generally newer employees are paid at a lower rate than established employees.

      • TNoebel

        Seems to me that these “hundreds of thousands of new jobs” (can you point me to the research that supports this job growth projection?), which, by your own acknowledgement are likely to be part-time roles, will continue to perpetuate the underemployment rather than the full employment of people. Also, this could easily result in cuts to benefits since the costs of the additional wages and associated payroll taxes, compliance and administrative burdens, etc., on organizations have to be covered somehow. It is naïve at best to simply think that businesses can pass costs on to customers via price increases. Small businesses and non-profits will be especially hit hard by the proposed changes. I struggle to see how expansion of regulatory burdens is beneficial to workers or those who employ them.

    • Stephen B

      Even the employees who don’t earn a penny more are still better off. They will be working only 40 hours a week instead of the 50 or more hours they’re working now. The new hires brought in to cover the ‘lost hours’ will boost the local economy as much as paying the employee overtime. Low-wage workers support local businesses and can’t afford tax shelters.