New federal rules to boost overtime pay for millions
Millions of Americans could see a boost in wages or reduced workload as a result of new federal regulations on overtime pay the Obama administration is unveiling this week.
Under the regulations, private-sector workers who make up to $50,400 a year will be guaranteed the right to earn additional pay if they work more than 40 hours per week. Currently, only workers who make $23,660 a year, or less than $455 a week, have those same protections.
The salary threshold had not been raised for a decade when Obama ordered the Labor Department to conduct a review last year, calling the figure outdated. The president plans to discuss the change Thursday in a trip to Wisconsin and previewed it in a Huffington Post op-ed posted late Monday night.
“We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve,” he said.
The change is likely to please labor advocates who had called on the administration to consider raising the threshold to salaries of at least $42,000 per year. They say an increased threshold could help stimulate the economy by boosting middle-class workers’ wages or triggering new hiring to prevent the need for paying the higher overtime rate.
Salaried employees who earn more than the threshold can be denied overtime pay if they fall under broad exceptions for administrative, executive or professional work. It’s unclear whether those exemptions will be clarified, as the president had requested.
The president said the change would affect nearly 5 million workers in 2016, and cast the change as part of the economic vision he outlined in his State of the Union address this year.
“In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America,” Obama wrote.
The president has touted positive economic trends since he took office at the height of the Great Recession. But middle-class wage growth has lagged even as the stock market has reached record highs, and a vocal wing of the president’s own party has pressed him to do more to address income inequality.
The overtime rules change is one of the most significant steps the administration can take without congressional action. The Fair Labor Standards Act, passed in 1938, gives the administration broad authority to set the rules without seeking lawmakers’ approval. Republicans are nonetheless likely to oppose any changes, which they say could harm the economic recovery.
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