In May the Obama Administration and the Department of Labor announced an update to overtime pay for American workers. In total, this new rule is expected to extend overtime protections to 4.2 million more Americans who are not currently eligible under federal law, and it is expected to boost wages for workers by $12 billion across the next 10 years.
The law established in the 1930s, called the Fair Labor Standards Act, outlined that anyone working more than 40 hours a week is working overtime. President Obama shared that the fundamental principle behind the Fair Labor Standards Act was to “help ensure that workers who put in more than 40 hours per week should generally get paid more for that extra time- time-and-a-half for the excess hours.” So, the law was mean to ensure that Americans working overtime get paid for over time.”
For much of the 20th century, the 40-hour workweek was a pillar of economic security for working families in America. The rules worked such that if you put in extra work, your employer had to pay you extra regardless of whether you received an hourly wage or a salary. This left most Americans with more money in their pockets.
However, the way this law has actualized over the past 40 years is that these overtime protections eroded due to a combination of inflation and lobbyists’ efforts to weaken them. The share of full-time workers qualifying for overtime based on their salaries has plummeted from 62% in 1975 to 7% today!
Today if you are salaried, you’re only automatically guaranteed overtime if you make less than $23,660; if you’re a manager on salary and you work extra hours a you often don’t get paid a dime more for those additional hours. Thus, every week, millions of Americans work more than 40 hours a week but do not receive the overtime pay they have earned.
In March 2014, President Obama signed a memorandum directing the Department of Labor to modernize our nation’s overtime rules, which have been comprehensively updated only once since the 1970s. President Obama worked with the Secretary of Labor, Tom Perez, and the Department of Labor, to update and modernize the overtime rules and uphold that basic principle of the Fair Labor Standards Act.
Vice- President Biden announced this past week that starting December 1, 2016 there will be a new rule increasing the cutoff for automatic overtime for salaried workers from$23,660 to $47,476, so that most salaried workers making less than $47,476 will be guaranteed overtime pay for working more than 40 hours a week.” This rule doubles the salary threshold and automatically updates it every three years. Companies will have a choice to pay their workers for the extra hours they put in, or cap their hours at 40 hours a week. This change will impact more than 4 million American workers so that they will get more pay if they work more than 40 hours a week.
This change will strengthen and secure the middle class by raising Americans’ wages. When workers have more income, they spend it and that helps grow the economy for everyone. President Obama shares that “this extra income will not only mean a better life for American families impacted by overtime protections, but will boost our economy across the board as these families spend their hard-earned wages.”
