What to Expect From the New Federal Overtime Rules

This week, theDepartment of Labor announced an update to its overtime rules , changing the wage threshold from $ 23,660 to $ 47,476. This is a pretty significant change, and the Economic Policy Institute (EPI) has released some numbers that indicate who will be most affected.

What will change

The wage threshold basically means that hourly and salaried workers who earn less than $ 47,476 a year must be paid one and a half times for every hour they work in excess of the standard 40 hours. There are exceptions (such as companies that make less than $ 500,000 in sales or nonprofit charities ), but overall, the new rules are expected to affect an additional 4.2 million employees.

The change will take effect December 1, and the threshold will automatically adjust every three years based on wage increases over time.

How the change will affect you

Exactly how this will affect you depends on how your employer reacts to the change. Employers have several options . They can increase your salary so that you are exempt from overtime work, limit your work to 40 hours a week, or simply pay overtime if you work more than 40 hours.

There seems to be some confusion as to whether the new change will require employers to switch their workers from paid to hourly workers. The Labor Department says this is not a requirement.

Who will benefit the most?

EPI has shared some information on the groups that will benefit the most from the change, based on data from the Bureau of Labor Statistics. Geographically, they found that southern states were more likely to see benefits:

The increase in the threshold will affect workers in all states, with the greatest effect in terms of the states with the largest proportion of wage earners in that state who will directly benefit from the increase in the threshold – West Virginia (30.7 percent), Arkansas (30.6 percent) … ), South Carolina (30.3 percent), Florida (29.3 percent), Tennessee (29.2 percent), Idaho (29.1 percent), Georgia (28.2 percent), South Dakota (28.2 percent) ), Delaware (27.7 percent) and North Dakota (27.5 percent).

They also predicted increased benefits in certain industries:

Of the major industries, the new threshold will have the most impact – in terms of the largest proportion of wage earners in the industry who will directly benefit from the increase in the overtime threshold – in agriculture, forestry, fishing and hunting (39.7 percent). ); leisure and hospitality (37.3%); other services (33.2 percent); construction (32.6%); and public administration (32.5 percent).

They add that younger workers (aged 16 to 34) make up 36.3% of workers who would benefit from the new threshold. There are several other interesting findings from the EPI, including a breakdown by “direct benefit workers” in each state. Check out their report at the link below.

New Overtime Rule Will Benefit Directly 12.5 Million Employees | EPI


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