For the first time in 15 years, the federal government is overhauling requirements for overtime pay — meaning that more than one million workers could see a bigger paycheck next year.
In January 2020, the Department of Labor’s new overtime rule will officially take effect, a victory for an estimated 1.3 million workers if they work more than 40 hours a week.
Up until now, only employees who earned less than $455 per week, or $23,660 annually, were eligible to receive overtime pay under federal law. That means they got paid 50 percent extra if they worked more than 40 hours per week. But the new rule changes the salary threshold to $35,568, or $684 weekly.
The figure hasn’t changed since 2004.
Individuals who are paid on a salary basis, earn more than $35,568 or have executive, administration and progressional job duties will not qualify for overtime pay.
In addition to being a major win for the newly eligible workers, the new rule could benefit employers, too, according to Erron Stark, division vice president of channel sales at data processing firm ADP.
“In this day in age, where we’re really trying to attract talent in such a tight labor market, employers can embrace this change and position it as a positive for their employees,” Stark told FOX Business. “If they recognize that benefit, there could be an inherent benefit to their organization as well.”
Still, the new regulation is far weaker than the version pursued by the Obama administration, which would have increased the federal overtime threshold to $47,476 and adjusted it periodically. The rule, which would have made an estimated 4.2 million more Americans eligible for overtime pay, was blocked by a federal court in Texas days before it went into effect.
“It's bittersweet,” Jeff Hirsch, a University of North Carolina labor and employment professor, wrote on Twitter. “Real let down from the Obama rules (especially the automatic increases), but at least it finally updates the 2004 salary levels.”