May 18, 2016. FPI applauds the White House and Labor Secretary Thomas Perez in announcing a new federal overtime regulation today requiring overtime pay for most salaried workers earning up to $47,476 a year (or $913 weekly). FPI’s James Parrott stated, “This will benefit an estimated 982,000 New York salaried workers with either additional pay for more than 40 hours a week, or by scaling back the long hours they work each week without any reduction in pay.”
The Washington, D.C.-based Economic Policy Institute, a key driving force in working with the Obama administration to update the nation’s overtime pay rules, estimates that 12.5 million workers nationwide will directly benefit from today’s action.
“Updating the income threshold determining eligibility for time-and-a-half overtime pay is long overdue,” added Ron Deutsch, FPI’s Executive Director. The previous overtime pay cutoff was $23,660, set in 2004. Deutsch noted, “Some workers are likely to get a pay raise to bring them above the new threshold so their employers will not have to pay overtime. There may also be instances where additional workers are hired so that businesses do not have to pay time-and-a-half.”
Parrott concluded, “This federal action is great news for working class New York families and particularly young workers. One-third of those benefiting are parents, and millennials (those ages 16-34) constitute 36 percent of affected workers.”
The new rule set the eligibility salary ceiling at the 40th percentile of salaries in the country’s lowest-income region, currently the South. Only seven percent of salaried workers are covered under the standard dating from 2004. In the future, the salary level will be adjusted every three years to that standard.
Workers paid on an hourly basis are unaffected by the new rule—almost all hourly workers are already eligible for overtime depending on their hours worked.
The new rule takes effect on December 1, 2016.
For more information on the new rule, see: https://www.dol.gov/whd/overtime/final2016/