About time: Labor Department proposal would make 1.1 million U.S. workers eligible for overtime pay

March 11, 2019

The U.S. Department of Labor has announcedproposed rule that would make 1.1 million American workers eligible to receive overtime pay beginning in 2020.

Under a 2004 currently enforced law, employees with a salary below $455 per week ($23,660 annually) must be paid overtime, if they work more than 40 hours during a given week.

The new proposal—which is subject to a 60-day comment period— would raise the salary cap of workers eligible for overtime from $455 to $679 per week (equivalent to $35,308 per year). 

“Our economy has more job openings than job seekers and more Americans are joining the labor force,” said Labor Secretary Alexander Acosta.  “At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and [the new] proposal would bring common sense, consistency, and higher wages to working Americans.”

“Commenters … overwhelmingly agreed that the 2004 levels need to be updated,” said Keith Sonderling, acting administrator for the Department’s Wage and Hour Division.

The NPRM maintains overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including: non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers.

According to an NBC News report, the threshold was last raised in 2004 under President George W. Bush. An Obama-era rule that would have raised it to $47,476 was blocked by a judge mere days before it was due to take effect on December 1, 2016. By that point, many big companies already had made adjustments to worker pay and titles — in some cases raising the pay of employees who were just below the higher threshold to just above it, or reclassifying salaried workers as hourly employees eligible to earn overtime.

In its announcement, the network news outlet said, the department indicated it was seeking a middle ground between a 15-year-old figure that had not kept pace with pay trends and the much higher cap that had been sought by President Barack Obama, which would have impacted 4.2 million workers.

Economists said the working poor would be the primary beneficiaries of the higher threshold, based on the NBC News report. “Expanding overtime eligibility will likely have a positive impact on wage growth for workers with lower wages,” said Daniel Zhao, Glassdoor senior economist.

Research contact: sweeney.megan.p@dol.gov

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