In a move that is drawing a heated response from business, the Department of Labor issued a new rule that updates the regulations determining which salaried employees are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections.
The rule increases the salary threshold below which most white-collar, salaried workers are entitled to overtime from the current $455 per week (or $23,660 for a full-year worker) to $913 per week (or $47,476 for a full-year worker).
Advocates of the bill said that long hours ordered by bosses have resulted in some managers earning well below the minimum page when unpaid overtime was calculated. The long hours are viewed by business as a path to future promotions.
The National Retail Federation attacked the rules as a failure “that will block upward career mobility, and that will cost businesses millions of dollars in administrative costs while giving few workers an actual increase in take-home pay.”
Fox News described the rules as a Career Killer in a headline.
The National Restaurant Association also weighed in:
“Restaurants operate on thin margins with low profits per employee and little room to absorb added costs. More than doubling the current minimum salary threshold for exempt employees, while automatically increasing salary levels, will harm restaurants and the employer community at large.”
The restaurant group noted that hundreds of members of Congress are poised to pull funding or take other steps to halt the rules.
The updated rules will affect 4.2 million workers who will either gain new overtime protections or get a raise to the new salary threshold, a Labor Department release stated.
Business groups attacked the proposal, and Congressmen vowed to fight the ruling via funding cuts.
Vice President and former U.S. Senator from Delaware Joe Biden told the New York Times the change was overdue. According to Biden, more than 60 percent of salaried workers qualified for overtime in 1975 based on their salaries. That number has fallen to 7 percent.
The Labor Department offered the following observations on who will see a boost in pay.
- More than half − 56 percent − are women, which translates into 2.4 million women either gaining overtime protections or getting a raise to the new threshold as a result of the rule.
- We also find that more than half – 53 percent − of affected workers have at least a four-year college degree, and more than 3 in 5 (61 percent) are age 35 or older.
- And 1.5 million are parents of children under 18, which translates into 2.5 million children seeing at least one parent gain overtime protections or get a raise to the new threshold.
Workers currently exempt those who are paid on a salary basis, earn at least $455 per week, and are employed in a bona fide executive, administrative or professional capacity.
Fact sheets and other materials to help employers and workers understand how the rule will affect them and the broader economy are available dol.gov/overtime.
