Economy

Are You One Of The 5 Million Americans About To Get Extra Overtime Pay?

CREDIT: AP Photo/Susan Walsh

Labor Secretary Thomas Perez with President Obama

The Department of Labor (DOL) has sent its finalized changes to the rule expanding who is covered by overtime laws to the Office of Management and Budget (OMB), ThinkProgress has learned, one of the final steps before it can take effect.

President Obama announced an executive order in early 2014 to update the labor regulations that require employers to pay time and a half for working more than 40 hours a week. It took a bit more than a year, but in June of 2015 the DOL announced its proposed rule to increase the salary threshold to $50,440, more than doubling it from where it stands now, thus ensuring that anyone who makes that much or less will be covered. It also proposed updating other exemptions to narrow how many people could be denied overtime because they qualify as highly compensated or as an executive or professional worker.

The change has sparked criticism, particularly from business groups like the National Retail Federation and National Restaurant Association. It drew nearly 300,000 comments while it was under the comment period.

But by releasing the final rule now, the DOL avoids the risk that it would get delayed even further by a Congressional “resolution of disapproval,” which would be an option after May 18. Once the rule is approved by OMB, it will likely go back to the DOL to be put into effect.

The changes, once in effect, will mark the first time the overtime threshold has been updated since 1975. Because of that lag, the threshold has effectively lowered as inflation has climbed. Loopholes also widened so that more and more employees were classified as exempt. Between both of those forces, the number of salaried workers covered by overtime requirements fell from 12 million in 1979 to 2.5 million in 2014.

When it released its proposed rule, the DOL estimated that 5 million employees would be newly covered in its first year, and that those newly covered workers would collectively see an extra $1.2 billion to $1.3 billion in compensation thanks to making time and a half. Employers can also opt to keep workers’ hours at 40 a week and hire others to pick up any slack. The change is therefore meant to help Americans who have gone decades with stagnant wage growth while also working far longer than 40 hours a week.