Dive Brief:
- On Monday night, President Obama announced through a blog on the Huffington Post that he intends to make at least five million more Americans eligible for overtime pay.
- Current regulations state that only employees who make under $23,660 a year and are not part of the “white collar exemption” qualify for time and a half overtime wages if they work over 40 hours a week. Obama plans to expand protections to all employees who make under $50,400.
- The rule will most likely go into effect in 2016 – if it survives challenges from Congress and court.
Dive Insight:
Obama has been working on these new regulations since his original announcement of intent in 2014, according to the New York Times. Advocates, including Jared Bernstein, a former White House economist, note that the new rule would clear some confusion for employers and employees about who is and is not exempt from overtime protections.
But while the new rule is praised by long-time supporters of the change, conservatives and business groups deeply oppose the plan.
The National Retail Federation, for example, has stated that expanded overtime protections will “add to employers’ costs, undermine customer service, hinder productivity, generate more litigation opportunities for trial lawyers and ultimately harm job creation.”
If the rule passes, economists claim that employers may reduce worker’s hours to save on overtime pay, according to the Times. In the long run, this means that wages will most likely even out to the levels they are at today.
Read our deep dive from May on the potential DOL rule change here.
