President Obama announced changes to federal overtime regulations this week, extending overtime benefits to an additional $5 million people by doubling the minimum exempt salary for workers to $970 a week in 2016. Workers making less than $50,440 a year will automatically qualify for overtime pay under the proposed rule changes.
Previously, a worker that made more than $455 a week did not automatically qualify for overtime under the federal rules. The amount was last updated in 2004, and the Obama proposal reflects inflation over the last 10+ years. The proposal further covers adjustments based on median wage levels in the future.
This proposal has been expected for some time as President Obama announced his intention to change the nation’s overtime rules more than a year ago. Forty percent of full-time salaried workers would be eligible for overtime pay after the rule changes go into effect.
Under the current rules, employers do not need to pay employees making more than $23,660 a year if they are performing mostly executive, administrative or professional duties. Only 8% of the full time salaried workforce is currently covered by the salary threshold, whereas 60% of salaried workers were overtime eligible when the rules were put in place in 1975.
The President talked about the need for the policy change on the Huffington Post last night, and then followed that editorial up with a Fact Sheet today on Rewarding Hard Work by Restoring Overtime Pay.