Coverage: Overtime pay will increase for many

The Obama administration bumped up Tuesday the level of pay for many workers needed to be eligible for overtime pay, which will result in higher income for millions.

Noam Scheiber of the New York Times had the day’s news:

Under the new regulation to be issued by the Labor Department on Wednesday, most salaried workers earning up to $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. The previous cutoff for overtime pay, set in 2004, was $23,660.

“This is a big deal to be able to help that many working people without Congress having to pass a new law,” said Ross Eisenbrey of the Economic Policy Institute, an early voice in urging the administration to take up the issue. “It’s really restoring rights that people had for decades and lost.”

The change is expected to play out in a variety of ways. Once the rule goes into effect on Dec. 1, many workers will receive more pay when they work overtime, but others may end up working fewer hours if employers move to limit their time at work. In other cases, employers may decide to increase the salaries of some workers to push them over the limit so that companies will not have to pay overtime or hire additional workers after limiting hours for existing workers.

Vice President Joseph R. Biden Jr., who will travel to Columbus, Ohio, on Wednesday to promote the new rules, said they touched on a core issue for Mr. Obama — ensuring that middle-class workers are treated fairly.

Ben Penn of Bloomberg BNA’s Daily Labor Report reported that many employers asked for more time to implement the new rules:

Other business advocates met with OMB to seek a more drastic rule modification: a gradual phase-in of the salary threshold.

For instance, Wal-Mart Stores Inc. CEO Doug McMillon had a teleconference in April with Valerie Jarrett, senior adviser to President Barack Obama.

McMillon reiterated the points the retailer made in public comments submitted on the proposal in 2015, Kory Lundberg, a Wal-Mart spokesman, told Bloomberg BNA via e-mail. Those comments called for an incremental increase of the salary threshold over five years.

The National Association of Wholesalers, the Retail Industry Leaders Association and others have joined Wal–Mart in its phase-in request (76 DLR A-10, 4/20/16).

Another leading call from employer stakeholders was for the OMB to send the draft final rule back to the DOL for further economic analysis.

When the National Restaurant Association convened a group of restaurant chain CEOs to discuss the rule with the administration May 9, they highlighted the “need for a further study on the impact of these regulations, particularly on small businesses,” Angelo Amador, the NRA’s vice president of labor and workforce policy, told Bloomberg BNA.

Michael Memoli of the Los Angeles Times noted that the new rule might influence November elections:

It could also be a boon for Democrats hoping to make stagnant American wages a major campaign issue in the 2016 election. Democrats in several states, including California and New York, have separately moved in recent months to raise minimum wages for low-income workers and to expand paid family leave.

“The American people want to work. They want a fair shot,” said Biden, who is expected to promote the new rule Wednesday in the key battleground state of Ohio. “No handouts, no guarantees. Just a good job at a fair wage.”

Labor Department officials estimated the new overtime rule will help a total of 4.2 million salaried, non-manufacturing workers nationwide, including 146,000 in California who are not currently protected by the state overtime threshold.

Congressional Democrats and labor groups had lobbied for the change, saying it could stimulate the economy by increasing workers’ salaries. Many employees may see their pay raised to be slightly above the new exemption threshold.