Millions of Americans work overtime on their jobs every week, and many of them receive the standard time-and-a-half pay for every hour worked over 40. But what many workers may not know is that (except for hourly employees) employers are only required to pay overtime to those workers currently earning under $23,660 per year. Now, the Obama Administration is moving to provide overtime pay protection to workers earning double that amount.
According to Administration officials, approximately 4.2 million people will qualify for overtime under the new rules, people who do not automatically qualify now. An additional 8.9 million workers will have their overtime statuses clarified; the current rules are not clear enough or strong enough to guarantee overtime pay to such employees when they work over 40 hours per week.
The push to update the federal overtime regulations is part of a larger push by the Obama Administration to help ensure that more Americans earn a living wage. Speaking about the changes Secretary of Labor Tom Perez commented that they are needed to correct situations in which employees are overworked and underpaid.
Though other work and pay issues, such as the federal minimum wage, require congressional action, the executive branch is not limited in that way as it relates to overtime regulations. This is because the overtime rules are set forth in the Fair Labor Standards Act, and can be modified by the President without the approval of Congress.
One of the ways that the new rules will clarify overtime for millions of employees is by addressing the status of managers, who have been treated as overtime exempt by employers for decades. Managers have been routinely required to work far in excess of 40 hours per week, sometimes over 70 hours, for no additional pay due to being classified as salaried employees.
Opponents of the change, including many business groups, believe that the added costs of paying overtime will lead to employers curtailing the number of hours worked by employees. The National Retail Federation accuses the Administration’s rule changes of unilaterally demoting millions of retail employees, changing them from salaried to hourly, and killing their careers as a result.
Though the rules will go into effect on December 1, there is a slim possibility that congressional action could derail the changes. Congress cannot directly block the changes, but with enough support it could try to defund the project. However, this course of action is not likely to succeed as any legislation from Congress will likely need the President’s signature in order to become law.
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