Obama Introduces New Overtime Pay Rule -- What You Need To Know
Barack Obama's new pay rule will entitle more workers for overtime pay by the end of this year.
It was recently announced by the White House that workers who earn less than $913 a week will be eligible for overtime pay if they exceed 40 hours a week. This means that overtime pay will go from $23,600 to $47,476.
The rule, which will take effect on Dec. 1, 2016, aims to revive the middle class of the U.S. The initiative is also targeted to low-salary workers who perform overtime but are currently unable to avail of overtime pay because of their managerial duties. According to KTLA, the rule will affect 35 percent of salaried workers.
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A report from San Francisco Chronicle indicated that this chance will apply to more than 4.2 million executives, administrative and professional workers will be entitled to time and a half wages for each hour they work beyond 40 hours every week. However, it also indicated that employers may have several ways to comply with the new rule. For one, they can provide over time pay.
Meanwhile, employers can also raise the employee's salary in order to avoid paying the overtime costs. It also stated that there is a chance that employers will refrain employees from working overtime, which could lead to the employment of overtime workers.
An economic expert from USA Today explained that while the rule is expected to bring benefits to workers, there could also be some negative repercussions.
"It should mean that workers will see bigger paychecks if they put in more than 40 hours weekly or a raise to the new salary threshold, assuming their employer wants to avoid the overtime requirements. But many businesses say there will be negative unintended consequences. Many salaried workers will be converted to hourly, and so they'll lose certain benefits and prestige, and may view the shift as a demotion," the expert explained. "Workers, including store managers, may have less flexibility to go the extra mile to do their jobs if their employer is intent on limiting their overtime pay."
