On May 17, 2016 whitehouse.gov announced sweeping changes to Department of Labor policy when it comes to worker eligibility for overtime pay, or rather, one major change is being made that will have a sweeping effect across the country for the coming decade.
According to Scott Horsley of NPR News as recently as 1970, over 60% of salaried (you read that correctly: salaried) employees qualified for overtime rates when made to work more than 40 hours in a week. As of today, that number is estimated to be less than 7%.
Why such a big drop? Over the years, employers have made a habit of misclassifying employees in order to avoid paying overtime premiums. Famous examples include fast food "supervisors" whose wages and duties are nearly identical to the hourly employees they supervise. The only difference being that the supervisors have to work 50–60 hour workweeks at a fixed rate.
The proposed rule will effectively double the minimum income threshold to qualify for overtime pay, raising it from $23,660 to $47,476. With median annual income in the US hovering around $50,000 this new rule will be a huge boon to struggling working and middle class employees— giving employees a little breathing room, and a little leverage, in these dicey economic times.
In a personal message posted to the whitehouse blog (linked at top), POTUS stated:
"Tomorrow, we're strengthening our overtime pay rules to make sure millions of Americans' hard work is rewarded. If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones. It's one of most important steps we're taking to help grow middle-class wages and put $12 billion more dollars in the pockets of hardworking Americans over the next 10 years."
President Obama, who has remained fairly quiet during this year's primary election hubbub, has been taking steps to cement his legacy as an advocate of the middle and working classes with executive orders and top-down changes to federal policy.
Stymied by a congress too much enamored with the neo-conservative economics of the 80's and 90's, POTUS has made use of his executive authority to strengthen protections for working people, including raising wages for federal employees.
The new rule will take effect on Dec. 1 2016, after nearly two years of study and review. The new rule will change how we interpret and enforce the depression-era Fair Labor Standards Act.
In his message, the President referred to raising Americans' wages as a "critical issue" and that this new rule would be a huge step in resolving that issue. Saying "Americans have spent too long working long hours and getting less in return," POTUS defends his choice economically by reasoning that raising effective income for the majority of Americans will boost the economy with increased spending.
As always, thank you for reading. To learn more about wage and overtime rules, visit our wage and overtime section. If you have a workplace dispute, don't hesitate to schedule a consultation with one of our knowledgeable employment attorneys today.