Wednesday, May 18, 2016

Obama announces final overtime rule, doubles overtime pay threshold

The Labor Department’s final rule, to be finalized Wednesday, establishes a new overtime pay threshold of $47,476 a year for those working more than 40 hours a week.
 That’s below the $50,400 that the administration announced in its proposal last June, but twice the current level of $23,660 a year, which has been unchanged for more than a decade.
 In addition, the rules will allow for future increases every three years.
A study commissioned by the National Retail Foundation -- based on the administration’s previous, higher threshold -- said 32% of affected workers would be converted from salaried positions to hourly ones, and that 5% of workers would see any salary increase offset by a reduction in bonuses and benefits.
The study predicted that a portion of the 21% of workers newly eligible for overtime pay could see their base wage reduced, resulting in no overall income gain.
 California already requires overtime compensation for people who make under $41,600 per year, which is double the $10-per-hour statewide minimum wage.
The state also allows workers to claim overtime if they work more than eight hours on any given work day, whereas the new federal rules only apply to people on the job for more than 40 hours a week.
 The measure could spur companies to increase pay for people who make more than the state’s minimum of $41,600, but less than the new federal threshold, said Tim McCaffrey, a Los Angeles employment lawyer who represents workers and employers in wage and hour cases.

The Obama administration and supporters of the new rule say the $23,660 threshold allowed companies to hold down labor costs by requiring workers with relatively lowincomes to work well over 40 hours per week without additional pay.
Any federal standard above the $35,100 overtime threshold in New York, which has a high cost of living, will inhibit economic growth in more rural states in the South and Midwest, Tammy McCutchen, a Washington D.C. lawyer who works with the U.S. Chamber of Commerce, said on Tuesday before the final rule was announced.