A new overtime rule is about to greatly impact the American middle class.
The Department of Labor (DOL) has announced an updated regulation that increases the salary threshold for paid overtime from less than $455 per week to $913 per week. Before, salaried workers were only entitled to paid overtime if they made less than an annual salary of $23,660. Today, employees who earn yearly salaries of $47,476 or less will be entitled to paid overtime if they work more than 40 hours a week.
WHAT THE NEW RULE MEANS
According to the DOL, these new rules will extend new overtime protections to 4.2 million workers in the United States. The Economic Policy Institute (EPI) has a much larger statistic, saying that these changes will impact 12.5 million Americans. This difference is a result of the DOL not including employees who were misclassified by their employers in its count.
This is because earlier rules exempt “high-level” workers from overtime, and based this on what was called a “duty test.” Many employers seized on this opportunity to change job descriptions to make it seem as if lower-level employees were performing more expert tasks, thus exempting them from overtime. This new rule makes things much clearer: If a worker makes less than $47,476, they are eligible for extra compensation if they work more than 40 hours a week, regardless of their job title or description. The EPI estimates that there are more than 8 million people who will now be more easily classified as eligible for the extra compensation, since they were considered exempt before due to their job descriptions.
Employers have a variety of ways to comply: They can raise these workers’ salaries to make them exempt from the overtime threshold, pay the mandated time-and-a-half overtime for those who do work more, or simply make sure employees aren’t working overtime.
These new rules will give workers in numerous demographics a significant pay boost. According to the DOL’s numbers, 2.3 million women will be eligible for these new protections, compared to 1.9 million men. Additionally, a little less than 2 million workers who have not earned college degrees will also be affected. Non-white workers too will be impacted. For example, 28% of both Hispanic and black salaried employees who were previously exempt from paid overtime will now be eligible.
