President Obama, in an Op-Ed column in the Huffington Post, is proposing to raise the existing $23,660 threshold for which eligible employees are automatically entitled to overtime to $50,440. Concerning this increase, the President wrote:
“We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.
This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.
That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.”
It is expected that the new overtime regulations will be put in place in 2016. I have previously posted about the procedures in place to review and implement the new regulations, including a period of time for public comments.
Practice pointer. Although the President has the authority to implement this change through the Department of Labor, I anticipate that there will be major political battles over his proposal. Democrats support it, Republicans oppose it. Some economists predict that many employers will reduce the number of hours for their employees to avoid paying overtime, similar to what some employers did in reducing hours for employees to get them below the threshold to qualify for health insurance under the Affordable Care Act. Additionally, in light of many workers becoming eligible for overtime when they make between $23,660 and $50,400, some believe that employers will reduce the starting compensation of new hires in the future to avoid paying higher overtime rates to these workers should they work more than 40 hours a week. I will continue to update the status of the proposed changes as they move forward.