5 Things to Know about Fixing the Overtime Rule


July 1, 2015

“We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.” – President Barack Obama

Yesterday, President Obama highlighted his plan to update overtime protections in a piece in the Huffington Post. What does this proposed rule mean, and why is it a good thing? Read on to find out.

5 Things to Know about the President’s Plan to Fix the Overtime Rule

  1. The current system hurts lower- and middle-wage workers. Currently, salaried workers who earn as little as $455 a week or $23,660 a year can be excluded from receiving overtime pay when working more than 40 hours a week if they spend even a small amount of time on duties classified by their employers as professional, administrative, or executive. This threshold is below the poverty line for a family of four. The proposed rule would raise the salary threshold to $970 a week or $50,440 a year in 2016, and index it for the first time so that it keeps pace with rising costs of living in the future.
  1. Workers will benefit. This proposal would extend overtime protections to nearly 5 million people, benefiting women, African Americans, Latinos, workers under 35, and workers with lower levels of education the most. The Department of Labor has a fact sheet showing how many people will be affected in each state. If you make less than $50,440 a year, a calculator at FixOvertime.org will show you how much you could benefit.
  1. It’s good for our economy. Workers who will benefit from overtime wages will have more money to spend, helping our economy. Employees may choose to hire more workers instead of paying overtime, which will help unemployed and underemployed workers, also helping our economy. According to the National Employment Law Project, the National Retail Federation has said the new regulations will create tens of thousands of jobs in the retail sector alone. Other workers will have more time to spend with their families by no longer being forced to work more than 40 hours a week while not being paid for it.
  1. It’s time to make some changes. The salary threshold has been changed only once since the 1970s. In 1975, 62% of full-time salaried workers were eligible for overtime pay. Today, that number is down to 8%. An update is long overdue.
  1. You can share your thoughts on this with the Department of Labor. The proposed rule will be open for public comment for 60 days starting next week; visit regulations.gov during that time period to share your thoughts. DOL will use that input to determine what to include in the final rule next year. And as Jared Bernstein pointed out, because this is a “rule change,” it doesn’t have to go through (and get caught up in the partisan gridlock of) Congress.

For more information, watch the short explainer video below from the Economic Policy Institute, or check out a report from the National Employment Law Project, The Case for Reforming Federal Overtime Rules: Stories from America’s Middle Class:

Labor and Employment