Obama unveils new Overtime Eligibility Rule

May 25, 2016

Obama unveils new Overtime Eligibility Rule

The US Department of Labor’s Secretary Perez and President Obama announced a final rule updating the overtime regulations on Wednesday, May 18. This astonishing rule will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.  With the intention and goal of ensuring all employees are paid fairly for a hard day’s work, President Obama signed a Presidential Memorandum advising the Department to amend the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards in 2014.

The overly anticipated rule that will make millions of Americans eligible for overtime was unveiled on Tuesday but formally released on Wednesday. The goal of this federal overtime rule is to fight income equality by heartening overtime protections that have crumbled in recent decades due to inflation. Previously, any employee who worked more than who earned more than $23,660 were exonerated from overtime pay. However, under the new rule, workers who earn salaries of less than $47,476 a year will automatically qualify for overtime pay of time-and-a-half as long as they work more than 40 hours a week, surely, many businesses are not too thrilled of this ruling. Some employers might simply reduce employee hours to avoid hitting overtime, and some might increase employee wages to be exempt from overtime pay.




According to the US today, Trey Kovacs, a policy analyst with the Competitive Enterprise Institute said, “The Obama rule puts a huge cost and regulatory burden on employers, who will face pressure to cut back on benefits and full-time employees.” Nevertheless, the White House estimates the rule change will raise employee pay by $1.2 billion a year over the next decade. “Either way, the worker wins,” said Vice-President Joe Biden on a conference call with reporters on Tuesday.

In aiming to make an additional 8.9 million workers eligible, Perez said that the new rule clarifies the specific types of duties white-collar employees must perform to be exempt. For example, some administrative employees do not supervise anyone.  This overtime threshold update has been long overdue since its last revision in 2004. Furthermore, this ruling is permitting employers to add bonuses and incentive payments for up to 10% in the new salary threshold.

Publisher: Salient News