Yesterday, the Labor Department issued its final rule updating overtime regulations, which will automatically extend overtime protections to millions of workers in its first year of implementation. The rule extends overtime protections to workers earning less than $913 per week or $47,476 annually for a full-time worker, and established a mechanism to update the threshold every three years.
Under the Fair Labor Standards Act, workers eligible for overtime must be paid “time-and-a-half” or 1.5 times their regular pay rate for each hour of work per week over 40 hours. Currently, hourly workers in most service and blue-collar jobs are guaranteed the right to overtime pay.
For salaried workers, the right to overtime is determined by their pay and nature of work. Currently, salaried workers who earn below $455/week ($23,660/year) are eligible for overtime, but workers who earn more than $455/week can be exempted from overtime if their occupations are considered professional, administrative, or executive.
The current salary threshold has not kept pace with inflation or the changing economy. In 1975, the overtime salary threshold covered about 62 percent of all salaried workers, compared to just 8% today. Had the threshold kept pace with inflation since 1975, it would be about $52,000 today. The proposed threshold largely restores its lost value.
The new rule means that millions of workers will get raises to put them over the threshold, be paid overtime for their overtime work, or have the weekly hours scaled back to normal full-time levels.
Overall, there are about 12.5 million salaried workers making at least $455/week (the old threshold) and $913/week (the new threshold), who will benefit from the rule change, including 66,000 in West Virginia. Of the 50 states, West Virginia has the biggest share of salaried workers (30.7%) who will directly benefit from raising the threshold.
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