Obama Extends Overtime Pay to Millions More Salaried Workers

By Katherine Muniz
May 19, 2016

On Tuesday, May 17th, 2016, the Obama administration passed a long-awaited rule that raises the cap for salaried workers owed overtime pay from $23,660 to $47,476.

The cap, which has not been updated since 1975 (four decades), doubles the existing maximum annual income a salaried worker can earn and still be eligible for overtime pay.

An estimated 4.2 million workers now have overtime rights who were excluded before. The new rule requires the threshold to be updated every three years and will take effect on Dec.1, 2016.

The start of the movement to update the overtime regulations began in 2014 when President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white-collar workers are protected by the FLSA’s minimum wage and overtime standards.

Initially, the overtime rule called for an increase to $50,550, a salary that in 2015, would match the buying power of a 1975 salary of $23,660, according to the New York Times.  According to the White House, the rule was updated to modernize the regulations while ensuring that the FLSA’s intended overtime protections are fully implemented.

“More than 4 million workers are either going to be paid more or get time back to raise their family, go to school  or retrain to get a better job,” Vice President Joe Biden said during a phone call with reporters on Tuesday. The Labor Department estimates the rule change could result in an additional $12 billion in pay for workers over the next decade.

Unsurprisingly, the rule has been intensely criticized by business groups and Republicans, with Republicans in Congress already announcing their intent to block the rule, despite needing to overcome a veto from President Barack Obama. Business groups have decried the move as drastic, and say that companies will be forced to cut wages and hours and may slow hiring.

In response, the Obama administration and supporters of the new rule say the $23,660 threshold allowed companies to operate with low labor costs while requiring low-income workers to work well over 40 hours per week without additional pay.
FingerCheck’s customizable software is invaluable in complying with changing rules, as employers can build their own overtime policies with custom rules. To learn how to build a new policy or tweak your existing policy you can consult our help desk, and/or call 1-800-610-9501 or email info@fingercheck.com for help.

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