Dept. Of Labor Proposal Would Expand Overtime Pay To Nearly Five Million More Americans

Working more than 40 hours a week but not getting paid overtime because you make too much already? If so, you might soon be pocketing more dough for your extra hours under newly proposed federal regulations that raise the threshold income level at which workers are exempt from overtime pay of time-and-a-half wages.

The Los Angeles Times reports that the proposed Department of Labor rule would be the first change to the salary threshold governing overtime pay in more than a decade and could affect the pay of nearly five million Americans starting in 2016.

The proposed regulations would more than double the current salary threshold at which employers can avoid paying overtime from $23,660 a year to $50,400 per year. Likewise, the regulation increases the pay of hourly workers exempt from overtime pay from $455 per week to $970 per week.

This means that if an hourly or salaried worker makes less than $970 per week or $50,400 per year, they would now have the right to receive additional pay if they work more than 40 hours per week.

“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,” President Barack Obama said in an op-ed piece announcing the proposed changes published on the Huffington Post late Monday.

Like the current rules, it is possible that some companies could skirt the new requirements. Currently some employers get away with dodging the extra pay by making an employee who’s paid more than $455 per week or $23,660 a year a “manager” with limited supervisory duties.

The potential rule change comes as a result of the Department of Labor’s review into overtime pay initiated last year.

The most recent change to the salary cap came in 2004. Obama contends that the current level has been diminished by inflation and is too low.

“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.

While the potential for overtime pay will likely be welcomed by employees, some industries believe the changes will hurt businesses and consumers.

The Retail Industry Leaders Association (RILA) said in a statement that the proposal would dramatically increase operational costs for retailers and diminish the flexibility and benefits currently provided to full-time employees that have advanced into management.

“Retailers will have two options if this rule is implemented: raise prices in order to absorb a dramatic increase in labor costs, or take away the benefits, such as flexibility and leadership opportunities, that come when an associate works their way into management,” Kelly Kolb, RILA vice present of government relations, said in a statement. “Neither of these are outcomes that will raise standards of living for our employees or our customers.”

The proposed rules must go through a public comment period before they take effect, which likely won’t happen for several months.

New federal rules to boost overtime pay for millions [The Los Angeles Times]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.