President Obama announced this week a new rule that will make millions more workers eligible for overtime pay.
Currently, employees who make $23,660 a year ($455 a week) or more do not have to be paid overtime if they are classified as exempt salaried or managerial workers. That covers many fast-food restaurant managers and people in service industries.
Under the new rule, that threshold will be raised to $50,440 a year ($970 a week).
That will allow millions more to be covered by the Fair Labor Standards Act’s overtime provision, which requires that workers be paid at least 1.5 times their regular rate of pay for each hour of work per week beyond 40 hours.
Obama wrote an op-ed piece in The Huffington Post explaining that the overtime pay extension will affect about 5 million workers and will likely be completed in 2016.
“A hard day’s work deserves a fair day’s pay,” the president wrote. “That’s at the heart of what it means to be middle class in America.”
The new rule was recommended earlier this year by the U.S. Department of Labor. And it’s something the Economic Policy Institute has pushed for years. The institute pointed out that the threshold had not moved with inflation, and many of those affected were working mothers and fathers.
The change is also something that Jared Bernstein, a former White House economist, has pushed. He published a report advocating for the increase, which would uphold the spirit of the threshold, which is often referred to as the “white collar exemption,” as it was meant to exclude executive, administrative and professional employees — not salaried workers at low pay levels.
The change will come after a comment period. And it should restore the overtime threshold to about where it stood in 1975, in terms of purchasing power, according to an article in the New York Times.