President Obama Expands Overtime Eligibility

The Obama Administration announced a new rule from the Department of Labor that would raise the current overtime threshold to $50,400 a year up from the current threshold of $23,660 as early as 2016.

The regulation change, which does not require Congressional approval, is coming under fire from business groups and Republicans who argue it threatens jobs and will force employers to cut hours for salaried employees. 

The National Retail Federation said the change would drive up retailers’ payroll costs, hinder productivity and harm job creation while limiting employee opportunities to move up into management.

“Most workers would be unlikely to see an increase in take-home pay, the use of part-time workers could increase, and retailers operating in rural states could see a disproportionate impact,” NRF said in a study on the impact of a new overtime rule.

Randel Johnson, senior vice president for labor at the U.S. Chamber of Commerce, warned Labor Secretary Tom Perez in a Feb. 11 letter that changes to existing overtime rules threaten to upend years of settled law, create tremendous confusion and would have a significantly disruptive effect on millions of workplaces.

The rule is expected to be completed in 2016.

President Obama in 2014 directed the Department of Labor to review the provisions of the Fair Labor Standards Act that govern federal regulation of overtime pay. The rules were last updated in 2004 and set a salary threshold under which employees much be paid overtime rates for hours worked beyond 40 hours per week. 

Publication of the rule will formally kick off a 60 day public comment period.



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