The Department of Labor’s new overtime rule, which takes effect on December 1, significantly increases the number of people who qualify for time-and-a-half pay for any hours they work beyond 40 in a week. Under the old, outdated rule, workers paid a poverty level salary of $23,660 per year could be considered exempt executives or professionals and be denied overtime pay. Under the new rule, salaried employees making less than $47,476 a year must be paid overtime.
In total, 12.5 million people (or 23.3 percent of salaried workers) will benefit — most of them because their right to overtime pay has been clarified and strengthened. But millions will for the first time receive time-and-a-half pay for any hours worked over 40 in a week, have their hours scaled back to 40 hours a week while still taking home the same pay, or get a raise to put them above the threshold.
In states such as Arkansas and West Virginia, around 30 percent of the salaried workforce will have a clearer right to overtime pay. Even in states where the smallest percentage of the salaried workforce will benefit, like Minnesota and California, around one sixth of the population will still benefit directly.
The rule has already led to increased pay for workers all across the country. Walmart and many other employers did not wait for the rule to take effect but instead gave raises to managers to put their salaries above the exemption threshold. Currently, there are moves afoot in Congress to block or repeal the new rule, and claims have been made that businesses will be hurt by the cost of implementation. CBO says the costs of implementation are uncertain, but the effect of repeal is clear: it will cut employee pay and increase inequality. If overtime protection is repealed, it would hurt thousands of working people in every state, preventing them from getting raises or making them work longer hours.
The new overtime rule will benefit working people in every state: Share of salaried workforce in each state directly benefiting from the new overtime rule
|State||Share of salaried workforce directly benefiting||Number of people directly benefiting||Share of total salaried workforce covered under new threshold|
Note: The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.
Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015