The U.S. Labor Department today issued a final rule that will significantly raise the pay threshold that triggers exceptions to the general rule that workers must be paid 1.5 times their ordinary pay for every hour they work over 40 hours per week. The Labor Department says that the new rule will
- Raise the minimum salary level below which workers have the right to overtime pay from $455/week to $913/week ($47,476 per year), ensuring protections to 4.2 million workers.
- Automatically update the threshold every three years, based on wage growth over time.
- Strengthen overtime protections for salaried workers already entitled to overtime.
- Provide greater clarity for workers and employers.
The Labor Department points out that employers can do several things with their work forces in response to the new rule: (a) pay time-and-a-half to newly covered workers; (b) raise workers' salaries above the new limit (that is, to or above $913 per week); (c) limit workers' work weeks to 40 hours; or (d) a combination of these things.
Go here for lots of information on the new rule from the Labor Department and the White House. The rule goes into effect on December 1, 2016.
An estimated 4.2 million U.S. workers will now be eligible for overtime pay who were not before. Click on this map showing where the newly eligible workers are located:
For more info and analysis, see this article by Noam Scheiber.