Experts say Obama's new overtime rule will benefit 12.5 million US workers
Currently workers covered by the Fair Labor Standards Act (FLSA) of 1938 must be paid at least time-and-a-half for each hour they work beyond 40 hours a week.
But the salary threshold under which workers are automatically eligible to receive overtime pay is a mere $23,660 a year (or $455 a week). Workers who make more than the threshold can be excluded from overtime protection if their jobs are determined to be executive, administrative, or professional. This easily allows employers to avoid paying overtime by simply giving workers manager titles and paying them just above the $23,660 annual threshold.
That will change on December 1.
The White House on Wednesday announced the final version of a new Department of Labor rule that would more than double the income threshold for overtime eligibility for salaried workers to $47,476 (or $913 a week), the first major increase to account for inflation that's happened in decades.
He believes these 12.5 million workers will benefit from the new rule, either by receiving time-and-a-half pay for any hours worked over 40 in a week, having their hours scaled back to 40 hours a week while still taking home the same pay, or getting a raise to put them above the threshold.
He also predicts that 100,000 more workers will benefit, as the overtime work will likely be shifted to either new employees or part-time employees who would not be working overtime. In fact, a study by Oxford Economics found that if the salary threshold were raised even to $808 a week, 76,000 part-time workers would be hired to fill the labor needs of businesses.
The new overtime rule would also automatically increase the threshold every three years, something Eisenbrey considers incredibly important. "The salary threshold will never erode again. We won't go through what we did - a 29-year period at one point where the salary threshold was not improved. It won't take an act of political courage in the future," he said.
While the new rule has drawn criticism from business groups and Republicans, it has also been met with support.
"The system is rigged and people know it," said Bill Samuel, legislative director of the American Federation of Labor and Congress of Industrial Organizations. "Taking this step to restore overtime is one of the many ways we're beginning to change the rules of our economy that are rigged in favor of Wall Street."