COLUMBUS — According to the U.S. Department of Labor, new federal rules on overtime pay announced Wednesday, May 18, will boost wages for low- and middle-income American workers who are now required to work overtime without pay.
“This will help millions of Americans who struggle to get by in our hard-driving economy,” PMO’s Amy Hanauer said in a press release.
At press time, the new rules were expected to be unveiled Wednesday by Vice President Joe Biden at an event at Jeni’s Splendid Ice Creams in Columbus. The U.S. Department of Labor announced that the updates will double the wage threshold under which overtime pay is required when an employee works over 40 hours a week. The annual compensation threshold will increase from $23,660 to $47,476.
It will benefit 12.5 million workers by extending overtime eligibility to 4.9 million workers and making it easier for another 7.6 million workers who already qualify for overtime to prove their eligibility. The rules take effect Dec. 1.
“It makes perfect sense to update these rules,” said Hanauer, who is executive director of Policy Matters Ohio. “This will mean that workers are paid for the hours they work and will help overworked American families restore some balance to their lives – or at least get paid when they are required to put in extra hours.”
In Ohio, the change means some 400,000 workers will get paid for the overtime they put in. Currently, someone working full time for less than the poverty level for a family of four could be forced to work overtime with no compensation.
Expanding overtime pay to more workers is particularly important in the face of stagnating wages for low- and middle-income families. Wages for U.S. workers have not kept pace with increased productivity in recent decades. The overtime threshold had been updated only once since 1975. It is also especially important in an economy where work is eating up more and more of people’s family and leisure time.
“Americans have always been willing to put in extra hours when necessary,” Hanauer said. “This will ensure that when they do, they are paid for their hard work.”
According to a report released Tuesday, May 17 by the Economic Policy Institute, “workers making at or above the old threshold could have been excluded from overtime protection if their jobs were determined to be executive, administrative, or professional (EAP) jobs. The new rule raises the threshold from $455 per week to $913 per week (in 2015 dollars). There are 12.5 million salaried workers making at least $455 but less than $913 per week, and under the Fair Labor Standards Act (FLSA), those workers could have been excluded from automatic overtime protection if they were classified, or incorrectly classified, as EAP employees.”
The EPI report went on to note: “FLSA overtime rules were established to make sure that no one but higher-level workers with control over their time or tasks works overtime without getting paid for it. Unfortunately, rule changes in 2004 regarding the “duties tests” used to determine who does relatively high-level work made it a lot easier to deprive many lower-level workers of overtime protection by tweaking their job descriptions. Employer willingness to push the limits of the law have resulted in widespread noncompliance and misclassification. Raising the threshold will return overtime protection to the employees who need it by preempting these malleable duties tests for the workers under the new threshold.”
Reach Eddie Mowen Jr. at 937-683-4056 or on Twitter @emowen_RH.