New Rule: Millions More Eligible for Overtime Pay

Today the President Obama and Labor Secretary Tom Perez will officially announce a new rule on overtime pay.

The regulations, which were last updated more than a decade ago, would let full-time salaried employees earn overtime if they make up to $47,476 a year, more than double the current threshold of $23,660 a year. The Labor Department estimates that the rule would boost the pockets of 4.2 million additional workers.

The move caps a long-running effort by the Obama administration to aid low- and middle-income workers whose paychecks have not budged much in the last few decades, even as the top earners in America have seen their compensation soar. The last update to the rules came in 2004, and Wednesday’s announcement is the third update to the salary threshold for overtime regulations in 40 years…

The change will go into effect Dec. 1 of this year.

In order to help Americans understand this new rule, the Department of Labor put out this video to explain the change.

The Economic Policy Institute also broke down what this means for workers.

To put this new rule in perspective, here is what economist Jared Bernstein said about it:

Along with health care reform this is one of the most important measures that the Obama administration has implemented to help middle-wage workers.

It comes as no surprise that some reporting on this from Politico muddies the waters. First of all, their title suggests that Obama is doing this to guarantee his legacy rather than give a pay boost to over 4 million workers. The article also says this:

[Obama is] also pushing the country leftward on a long-sought labor wish list by enacting a rule protecting workers from silica dust as well as by broadening access to overtime pay — measures that Democrats have been unable to push through a Republican-controlled Congress.

The Fair Labor Standards Act actually gives the president the authority to raise the threshold on overtime pay – not Congress. That is exactly what has happened the three times it has been raised over the last 40 years. It is why having a Labor Secretary like Tom Perez is another example of how elections matter.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.